The fast view
- Emerging market (EM) economies have emerged from the pandemic in a far healthier condition than was initially feared.
- EM central banks have acted prudently – and far more quickly than their developed market peers – lifting rates to levels more appropriate for the inflationary conditions. Spreads are at historically wide levels.
- This building of buffers and resilience should help them weather two major challenges: tightening global liquidity in conjunction with slowing growth, and the weakening growth outlook in China.
- By the second half of 2022, we will likely feel the strong base effects of the sharp rise in inflation seen in 2021.
- We believe there should be opportunities in EM dollar debt, particularly high-yield countries. In equities, aligning portfolios with government priorities is a prudent approach; the key, as always, is to remain selective.
Learn more about Ninety One
More podcasts from Ninety One: