JPMorgan improved the qualification of emerging market shares (EM) A Over -fulfillment, citing a combination of better macroeconomic conditions, favorable policies and attractive assessments. This change comes after four years of low performance, during which the actions of emerging markets were lagging behind the developed markets (DM) for 40%.
“The risk-benefit balance of EMs is improving,” wrote the strategists led by Mislav Matejka. The improvement, which follows a Previous change of infraponderation to neutral in the first quarteris driven by several factors, mainly the reduction of commercial tensions.
The United States recently reduced the proposed tariffs for China, lowering the rate from 145% to 41%. “Although it is unlikely that this is the end of commercial tensions, We believe that the worst is already happening“The strategists pointed out.
A Harst USD (USD) is also considered a favorable factor For emerging market shares, which have historically operated in reverse to the dollar. JPMorgan’s currency team (FX) expects greater weakening in the second half of the year as Improve growth outside the US.
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For JP Morgan “the worst has happened” but the dollar will remain low
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“They expect the USD to weaken in front of the main currencies in the next quarter due to the best growth trends outside the US,” the strategists continued. “They also expect emerging market currencies to stabilize against the dollar and believe that some reduction in recession risks I could even help EM’s currencies overcome the dollar. “
What countries would be the biggest beneficiaries, according to JP Morgan
Within the space of emerging markets, JP Morgan sees specific opportunities per country, particularly in India, Brazil, Philippines, Chile, Eau, Greece and Poland. The Bank described India as “a safe shelter in the midst of the commercial war 2.0,” citing a strong economic impulse and political support.
Brazil is expected to benefit from a weaker dollar and China’s rebound, while the Philippines stands out for its domestic approach and the flexibility of its monetary policy.
JP Morgan too He reiterated his positive vision of Chinese technological actions and maintained an overponderation in the mining sector. Despite the recent volatility, the Wall Street giant said that Chinese actions could benefit from political support, improvement of liquidity and updated GDP forecasts.
Among other sectors of emerging markets, the firm maintains its long -standing infraponderation positions in car and luxury sectors, despite the potential of some support if emerging market actions operate more positively, and remains cautious with the energy sector.
Although it is typically not a main catalyst, Matejka highlights the attractive assessments in emerging market shares, which are listed 12.4 times future gains compared to 19.1 times for developed markets. “The positioning of global investors in EM is low,” added the strategists, suggesting space for capital tickets.
Source: Ambito

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