Milltrust EM Commentary – May 2021

May 28, 2021

BY Eric Anderson

Overall EM earnings growth is positive and we expect to see earnings growth continue to broaden from its current concentration in technology and materials, to include other plays on recovering domestic demand.

We continue to be overweight Asia within our portfolio which will benefit from the current environment. China is growing at a robust, above‐trend growth, with concerns over the COVID‐19 pandemic slipping into the distant past. This contrasts with the case of the U.S., where growth is primarily the consequence of fiscal stimulus, and the euro area, where there are constant worries over the persistence of the pandemic and the fragility of growth. 

Chinese domestic demand remains a solid plank supporting a sustained global economic expansion in the year ahead; this is bullish for global trade which is the single most powerful driver of EM equity performance.

Outside of China, we expect to see continued outperformance from Korea and Taiwan due to the strong semiconductor component, an accelerating earnings momentum in Indonesia supported by domestic consumption, a strong growth rebound in India once the country gains back control over the COVID‐19 pandemic and very compelling commodity plays in Brazil; all of these offer interesting opportunities across the asset class.

Emerging Markets Webinar Series: Investing outside of Asia – Hear from the Local Specialists

Following our Asia series in March, we will host our non-Asia strategy webinars in June:

June 22nd: Africa
Thursday June 24th: Brazil
Tuesday June 29th: Russia

Register here

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