Head, Emerging Market & Asia Pacific Equities
Head, Asia Pacific Regional team, Emerging Market & Asia Pacific Equities
In this paper, we outline why emerging market and Asia Pacific equities may be approaching an important inflection point.
1
The MSCI Emerging Markets Index and the MSCI All Country Asia Pacific Index returned nearly 25% in EUR/USD terms in the year to the end of August, roughly double the return of the S&P 500, and have now matched the S&P 500’s annualised return over three years.
2
This advance looks less like the liquidity- and stimulus-driven recoveries of the past decade and more like the early-2000s investment cycle, when capital spending and earnings growth reinforced one another over multiple years.
3
A weakening, increasingly pro-cyclical US dollar and a persistent inflationary boom are supporting pricing power, capital investment and earnings growth.
4
While North Asia remains at the centre of the global artificial intelligence (AI) build-out, investment and earnings growth are beginning to broaden across regions, supported by China’s technology self-sufficiency and the broader industrial cycle across emerging markets and Asia Pacific.