THIS MATERIAL IS A MARKETING COMMUNICATION.
2019 Emerging Markets Mid-Year Outlook
A Silver Lining Amid Global Uncertainty
We believe that emerging market (EM) equities are in the midst of a multi-year recovery, continuing to take advantage of the current volatility to increase positions in high-conviction secular stories. We see favorable conditions in the form of a dovish US Federal Reserve (Fed), a weaker US dollar outlook, a Chinese economic stimulus and an eventual US-China trade resolution.
Asia ex-Japan – Asia ex-Japan valuations are currently at an attractive level and we see compelling risk-reward opportunities. China remains an attractive structural story, despite the headline risks. We expect Chinese policymakers to roll out further measures to support the domestic economy and anchor market expectations. In India, Prime Minister Modi’s re-election win should be positive for the Indian equity market as it provides stability and continuity for his development agenda.
Latin America – Latin American countries continue to benefit from higher commodity prices and improved governance. After elections in many countries across the region last year, the focus has now shifted to policy implementation. Our long-term outlook for Brazil remains constructive. Brazil is coming from a low earnings base, valuations remain attractive, and we see key catalysts for a near term country re-rating.
Eastern Europe, Middle East and Africa region (EEMEA) – EEMEA presents a diverse opportunity set. Countries like Russia, Saudi Arabia, and the United Arab Emirates should benefit from both higher oil prices and low inflation. Elections in South Africa and Greece will likely lead to more market-friendly policies. Overall, valuations are attractive, political backdrops seem to be improving, and we believe that the region is set for solid performance in the second half of the year.
Fig.1. Asia ex-Japan Trailing P/B
Fig.1. Source: Credit Suisse (2019)
2019 Emerging Markets Mid-Year Outlook
A Silver Lining Amid Global Uncertainty
We believe that emerging market (EM) equities are in the midst of a multi-year recovery, continuing to take advantage of the current volatility to increase positions in high-conviction secular stories. We see favorable conditions in the form of a dovish US Federal Reserve (Fed), a weaker US dollar outlook, a Chinese economic stimulus and an eventual US-China trade resolution.
Asia ex-Japan – Asia ex-Japan valuations are currently at an attractive level and we see compelling risk-reward opportunities. China remains an attractive structural story, despite the headline risks. We expect Chinese policymakers to roll out further measures to support the domestic economy and anchor market expectations. In India, Prime Minister Modi’s re-election win should be positive for the Indian equity market as it provides stability and continuity for his development agenda.
Latin America – Latin American countries continue to benefit from higher commodity prices and improved governance. After elections in many countries across the region last year, the focus has now shifted to policy implementation. Our long-term outlook for Brazil remains constructive. Brazil is coming from a low earnings base, valuations remain attractive, and we see key catalysts for a near term country re-rating.
Eastern Europe, Middle East and Africa region (EEMEA) – EEMEA presents a diverse opportunity set. Countries like Russia, Saudi Arabia, and the United Arab Emirates should benefit from both higher oil prices and low inflation. Elections in South Africa and Greece will likely lead to more market-friendly policies. Overall, valuations are attractive, political backdrops seem to be improving, and we believe that the region is set for solid performance in the second half of the year.
Fig.1. Asia ex-Japan Trailing P/B
Fig.1. Source: Credit Suisse (2019)
Disclaimer & Information for Investors
No distribution, solicitation or advice: This document is provided for information and illustrative purposes and is intended for your use only. It is not a solicitation, offer or recommendation to buy or sell any security or other financial instrument. The information contained in this document has been provided as a general market commentary only and does not constitute any form of regulated financial advice, legal, tax or other regulated service.
The views and information discussed or referred in this document are as of the date of publication. Certain of the statements contained in this document are statements of future expectations and other forward-looking statements. Views, opinions and estimates may change without notice and are based on a number of assumptions which may or may not eventuate or prove to be accurate. Actual results, performance or events may differ materially from those in such statements. In addition, the opinions expressed may differ from those of other Mirae Asset Global Investments’ investment professionals.
Investment involves risk: Past performance is not indicative of future performance. It cannot be guaranteed that the performance of the Fund will generate a return and there may be circumstances where no return is generated or the amount invested is lost. It may not be suitable for persons unfamiliar with the underlying securities or who are unwilling or unable to bear the risk of loss and ownership of such investment. Before making any investment decision, investors should read the Prospectus for details and the risk factors. Investors should ensure they fully understand the risks associated with the Fund and should also consider their own investment objective and risk tolerance level. Investors are advised to seek independent professional advice before making any investment.
Sources: Information and opinions presented in this document have been obtained or derived from sources which in the opinion of Mirae Asset Global Investments (“MAGI”) are reliable, but we make no representation as to their accuracy or completeness. We accept no liability for a loss arising from the use of this document.
Products, services and information may not be available in your jurisdiction and may be offered by affiliates, subsidiaries and/or distributors of MAGI as stipulated by local laws and regulations. Please consult with your professional adviser for further information on the availability of products and services within your jurisdiction. This document is issued by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Securities and Futures Commission.
Information for EU investors pursuant to Regulation (EU) 2019/1156: This document is a marketing communication and is intended for Professional Investors only. A Prospectus is available for the Mirae Asset Global Discovery Fund (the “Company”) a société d'investissement à capital variable (SICAV) domiciled in Luxembourg structured as an umbrella with a number of sub-funds. Key Investor Information Documents (“KIIDs”) are available for each share class of each of the sub-funds of the Company.
The Company’s Prospectus and the KIIDs can be obtained from www.am.miraeasset.eu/fund-literature . The Prospectus is available in English, French, German, and Danish, while the KIIDs are available in one of the official languages of each of the EU Member States into which each sub-fund has been notified for marketing under the Directive 2009/65/EC (the “UCITS Directive”). Please refer to the Prospectus and the KIID before making any final investment decisions.
A summary of investor rights is available in English from www.am.miraeasset.eu/investor-rights-summary.
The sub-funds of the Company are currently notified for marketing into a number of EU Member States under the UCITS Directive. FundRock Management Company can terminate such notifications for any share class and/or sub-fund of the Company at any time using the process contained in Article 93a of the UCITS Directive.
Australia: The information contained in this document is provided by Mirae Asset Global Investments (HK) Limited (“MAGIHK”), which is exempted from the requirement to hold an Australian financial services license under the Corporations Act 2001 (Cth) (Corporations Act) pursuant to ASIC Class Order 03/1103 (Class Order) in respect of the financial services it provides to wholesale clients (as defined in the Corporations Act) in Australia. MAGIHK is regulated by the Securities and Futures Commission of Hong Kong under Hong Kong laws, which differ from Australian laws. Pursuant to the Class Order, this document and any information regarding MAGIHK and its products is strictly provided to and intended for Australian wholesale clients only. The contents of this document is prepared by Mirae Asset Global Investments (HK) Limited and has not been reviewed by the Australian Investments & Securities Commission.
Copyright 2021. All rights reserved. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of Mirae Asset Global Investments (Hong Kong) Limited.