Redwheel: Five minutes on global emerging market and frontier markets with John Malloy
February 3, 2023
Redwheel Co-Head of Emerging & Frontier Markets, John Malloy believes the key drivers of growth for emerging markets in 2023 will be led by the Chinese recovery, commodities and the interest rate cycle.
Emerging market equities faced many headwinds during 2022 but began to recover in the final quarter of 2022. These headwinds should shift into tailwinds for emerging market equities due to relatively strong growth, decelerating inflation and improving fundamentals.
In this short video, John looks at the top three drivers of growth:
China's recovery - As one of the largest economies in the world, the opening up of the Chinese economy will have an impact on the global economy. Policy change is encouraging growth in sectors such as energy transition, stability and economic development. As China's economy recovers, it will be a key driver of growth for many of the countries in emerging markets as it will create increased demand for commodities and services from these countries.
Commodities - commodities are a key driver of growth for many emerging markets, as they are a major source of revenue. Many of the commodities that are set to do well include Copper and Lithium.
Interest Rate Cycle - The expected deceleration in inflation could have a positive effect on emerging markets' economies. This, combined with a moderating outlook on economic growth, could allow many emerging markets central banks to focus on lowering rather than increasing interest rates this year. It is encouraging to see that supply bottlenecks may be alleviated which could lead to more equitable access to goods and services.
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Important Information
No investment strategy or risk management technique can guarantee returns or eliminate risks in any market environment.
Past performance is not a guide to future results. The prices of investments and income from them may fall as well as rise and an investor’s investment is subject to potential loss, in whole or in part.
Forecasts and estimates are based upon subjective assumptions about circumstances and events that may not yet have taken place and may never do so.
Unless otherwise stated, all opinions in this article are those of the Redwheel Global Emerging and Frontier Markets team as at November 2022. This article does not constitute investment advice and the information shown is for illustrative purposes only.
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