Convictions

Emerging market winners in a fragmented world

Understand how to take advantage from EM’s growth potential and generally low levels of correlation with developed markets

A bridge connecting cities in South Korea at sunset

In an environment of weak global demand, the premium in favour of EM vs DM is projected to continue widening. In our view, there are structural factors at play that support EM. These include an incrementally higher global fragmentation, involving a reallocation of global value chains, supply chain de-risking as well as the need for critical raw materials for the Net Zero transition.

We foresee a return of appetite for EM equity for the year; this phase is still supportive for quality and growth styles (mainly EMEA and India). Moving further into 2024, a recovery in EM growth would favour a shift to valuation styles (LatAm favoured).

In fixed income, we like both hard currency and local currency bonds, given the strong fundamentals and disinflation in the US, combined with slowing inflation in EM. We favour EMEA and LatAm while we remain cautious on EM Asia, with the exception of Indonesia and India.

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Unless otherwise stated, all information contained in this document is from Amundi Asset Management S.A.S. and is as of end of January 2024. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi Asset Management S.A.S. and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results.

Date of first use: 2 February 2024

Doc ID: 3368819

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