Interview
What’s Next for Emerging Markets Equities
- Asian lockdowns are expected to end with emerging market conditions significantly improving compared to March.
- Continued strong fiscal stimulus across various government sectors is anticipated to support emerging market valuations.
- E-commerce structural growth is projected to continue, with online penetration in Latin America expected to rise from 5% to between 10% and 15% over the next five years.
- Global supply chain capacity relocation out of China is forecast to vary by sector, with most capacity shifting to other emerging market countries, including Mexico.
- Developed market fintech and payments leaders are expected to study emerging market examples to define addressable markets and forecast company structures five to ten years ahead.
- Latin America is projected to rapidly close the gap with China and India in fintech and payments while maintaining current strong performance.
- Financial intermediation for unbanked and underbanked populations in emerging markets is identified as a primary mechanism to lift individuals out of poverty and integrate them into the financial system.
- Earnings are forecast to decline significantly this year followed by a substantial recovery next year.
- Emerging markets are expected to achieve approximately 7-8% earnings growth in dollar terms when comparing last year's earnings to 2021 figures and averaging the results.
- Specific invested companies are projected to deliver earnings growth exceeding the 7-8% emerging market average.
- Sentiment remains positive for emerging markets and associated companies due to historical and developed market valuation discounts combined with projected earnings growth.