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.
(Video length 00:10:27)
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