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Eye of the Tiger: 2022 Emerging Markets Outlook
Coming out of 2021 and into the Lunar Year of the Tiger, there are three areas in which we believe Emerging Markets (EM) are ahead of the pack creating a foundation for opportunities within the asset class in 2022:
- Vaccination rates in key EM countries, such as China, Taiwan, South Korea, and most of Latin America, are well ahead of the US.
- Chinese regulations startled markets in 2021, but we believe similar rules are yet to come across US and European markets.
- Several EM central banks (Russia, Brazil Chile, Colombia, Mexico, Peru, the Czech Republic, Hungary, Poland, Korea, and South Africa) began raising interest rates well ahead of the US and Europe in 2021.
- Asia ex-Japan: Similar to the rest of the world, Asian capital markets continued to experience volatility in 2021 due to the ongoing COVID-19 pandemic. However, high vaccination rates, improving mobility metrics, and policy shifts to a “living with COVID” approach are all positive signs supporting a post-pandemic reopening. We expect Asia ex-Japan to benefit from a rebound in domestic consumption as well as exports in 2022. Current macroeconomic conditions lead us to remain optimistic on India, South Korea, Vietnam, and select (but significant) opportunities in China as we look ahead.
- Latin America: In 2022, we anticipate Latin America to balance political uncertainty with supportive commodity prices and economic reopening across the region. Strong demand from DMs and recovering demand from China could lead to continued strength in energy, materials, and agriculture, which would improve current account and fiscal balances.
- Eastern Europe, Middle East & Africa (EEMEA): EEMEA boasts a wide range of opportunities based on discounted multiples, strong demand for natural resources, improving geopolitical rhetoric, and sound domestic consumption stories. We are most optimistic about Greece due to the combination of a stable economic backdrop, market-friendly political leadership, and the tourism-led recovery. We also see opportunities in Russia driven by attractive valuations and macroeconomic tailwinds.
Staying Ahead with Mirae Asset’s Latest Insights
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