Morgan StanleyAnalystIt is pointed out that the current situation in emerging markets seems to be somewhat confusing. The bank had predicted that in 2019, when emerging markets were compared with developed markets, growth would accelerate both directly and relatively. Actual in emerging marketsinterest rateHigher, reducing the need for further tightening. The dollar will fall due to the US economic slowdown and the Fed’s moderate attitude. In this context, the valuation of emerging markets is more reasonable.
Analysts believe that at present, the economic growth rate of emerging markets will rise from 4.3% in the first quarter to 5.0% at the end of the year, and the inflation rate will remain at a low level. The Fed will maintain its benchmark this yearinterest rateIt is predicted that the US dollar will depreciate sharply. The forward price-to-earnings ratio of stocks in emerging markets is about 12 times, slightly higher than the 10-year average;CreditThe spread is slightly below the 10-year average; foreign exchange valuations are still well below average. Emerging market valuations vary, but consistent with the forecast, valuations seem reasonable.
In the past six months, for asset configurators, a lot of attention has been focused on the point that emerging markets have been underperforming for a long time, and now it’s time for them to shine. It is. Analysts pointed out that this view is likely to lead to a rebound in the amount of money invested in emerging markets.
It is worth noting that although the macroeconomic background of emerging markets is close to the ideal state, there are also unstable factors that will affect the market trend.
For example, the new government in Mexico and Brazil, which has not yet addressed the issue of pension reform; South Africa is facing additional infrastructure problems; India and Argentina are in the process of election; Russia faces geopolitical risks; South Korea’s technology is weak; trade friction remains Unresolved, and this is only part of the challenge facing emerging markets.
In a sense, emerging market countries are experiencing political or economic instability. But on a practical level, asset configurators will not give up investing in stocks and fixed-income products in emerging markets.
Jonathan Garner, head of strategy for Morgan Stanley Emerging Markets and Asian equities, said he will continue to increase its holdings in China, which currently has a total return of about 10%. Jonathan pointed out that the Chinese stock market provides a reasonable valuation, plus the upcoming stimulus measures and progress in trade negotiations. Jonathan believes that Chinese stock markets are more attractive to asset configurers than other emerging market countries.
In addition, James Lord, head of the bank's Emerging Markets Fixed Income Strategy, pointed out that both Mexico and Indonesia have higher real interest rates, and the easing of inflation allows the central banks in these two countries to implement more lenient than market expectations. ofcurrencypolicy. Indonesia has a higher real rate of return and a reasonable monetary value, while Mexico has a lower real rate of return and a lower currency price. Both markets offer opportunities for asset configurers investing in fixed income.
James added that the emerging market EM hard currency debt is one of the bank's investment assets that it believes will have higher yields this year. The hard-earned bond yield was about 5.9%, with a volatility of 4.8% for 12 consecutive months. Since 2010, the volatility of hard currency bonds for 12 consecutive months has rarely exceeded 5.5%. James said that both local and hard-through bond yields in emerging markets are higher than US Treasury bonds. Fixed income assets will provide better returns between fixed income and equities in emerging markets.
All in all, although emerging markets have development problems, their assets will not be attractive to investors, and Morgan Stanley analysts believe that investing in emerging markets will eventually receive excess returns.