In this video I take you through the outlook for emerging market equities, focusing on the macro drivers, sentiment setup, and valuations picture. The charts come from a recent edition of the Weekly Macro Themes report, which dealt directly with these issues as well as a couple of key supporting topics (i.e. EMFX, the USDCNY, and the broader global macro pulse).
The main takeaways from the presentation are:
-EM equity breadth has sharply broken down, and the shorter term indicators look oversold.
-EM equity sentiment has fallen after previously reverting to neutral; providing a minor bullish contrarian signal.
-Valuations have improved, and although not as cheap as the late-18 lows, are still compelling on a medium term timeframe.
-The big risk for emerging markets is that the US dollar has another run, or that other macro drivers such as China and/or commodities roll over again.
Let me know what you think in the YouTube video comments section, I’d love to hear your take and indeed your feedback on both the video, charts, and conclusions.