Wednesday, 17 April 2019
Global growth has gone into a synchronous slowdown but the dovish turn in Fed rhetoric that this has motivated is allowing global equities as well as Emerging Markets equities to recover from their rout of Q4. Several EM central banks are already reducing their interest rates ahead of the Fed. A softening dollar will help ease the debt burden of EM economies like Turkey, South Africa and Brazil. Investors look forward to a resolution to the US-China trade war.
Though relieved it is soon to end, we consider the silver lining of this dispute. It is forcing China to respect US companies' Intellectual Property and to open its economy further to foreign direct investment. It has also encouraged China to strengthen trading and investment relations with other countries. We recommend remaining moderately overweight in Global Emerging Market equities.
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