This paper analyse the prerequisites for a rebound in emerging markets asset classes, and the positive key features of these markets. It also presents the different ways to invest in these countries and the Amundi approach. The emerging markets have been in a slump since 2013 (when investors began to fear the end of the Fed’s QE) until February 2016 (when concerns that China would founder and/or devalue the yuan finally subsided). In the meantime, recession has hit the major emerging economies (especially Russia and Brazil), and the plunge in commodities prices has fuelled the decline in emerging markets and currencies.
Senior Economic Advisor
There was a substantial decline in Q2 earnings but they turned out to be better than expected; their decline being ultimately less pronounced than during the Great Financial Crisis (GFC) of 2008-2009, whereas the current recession is much more severe. This surprising resilience is due in large part to sector aspects. Financial stocks have generally proved more resilient than during the GFC. Furthermore, the Healthcare and Technology sectors have emerged remarkably unscathed. The other side of the coin is that, without these last two sectors, the decline in earnings would have been much more pronounced. Given the revisions made and the achievements in H1, barring a new general lockdown episode, most of the consensus adjustment seems to be behind us. However, the valuation debate - excessive or not - is still far from being resolved. The duration of the crisis will be the key parameter in responding to this question.
Amundi Hong Kong Chief Economist