Emerging Markets November 2018

Tuesday, 13 November 2018

Despite the Democratic party gains in the US midterms, the US trade war will continue, with China as the main target. We don't see an imminent end to the  bear market for Emerging Market equities established in recent months, with increased volatility in EM currencies. Brazilian equities are far too expensive after investors' excessive enthusiasm over the victory of 'business friendly' Bolsonaro. When the oil price stabilises and recovers from its sharp recent fall, we expect money to flow out of Brazil and into extremely cheap Russian equities, which discount intensifying US sanctions.

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