2020 Sector Outlook: Emerging Market Equities
We are bullish on emerging market (EM) equities for 2020 given valuations, continued low interest rates and cyclical and structural growth in many of these countries.
We are not sanguine on China-US trade tensions. While there might be some breakthroughs, structural issues will likely remain. However, China has room for fiscal and monetary stimulus and will likely support domestic demand in case of a slowdown. Earnings generated by companies in Brazil should continue to do well despite weak headline macro growth. Increasing consumer confidence, reforms and potential investment will likely be supportive. While India is going through a significant slowdown, we are optimistic about its economy for 2020. The country’s shadow banking crisis appears to be in its late stages and liquidity should resume due to government and regulatory measures.
We expect further rate cuts in several EM countries in 2020, as well as neutral-to-easing monetary policy by the major developed market central banks. A concern for EM growth is the timely transmission of monetary policy by EM financial systems.
The information in this article is provided for general information purposes only and does not take into account the investment objectives, financial situation or needs of any person. Investors Mutual Limited (AFSL 229988) is the issuer and responsible entity of the Loomis Sayles Global Equity Fund (‘Fund’). Loomis Sayles & Company, L.P. is the investment manager.
This information should not be relied upon in determining whether to invest in the Fund and is not a recommendation to buy, sell or hold any financial product, security or other instrument. In deciding whether to acquire or continue to hold an investment in the Fund, an investor should consider the Fund’s product disclosure statement, available on the website www.loomissayles.com.au or by contacting us on 1300 157 862. Past performance is not a reliable indicator of future performance.