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Will China join the Emerging Market recovery?
2023 saw the beginning of a recovery in Emerging Markets (EM) but China continues to lag behind. The MSCI EM ex China delivered a year-to-date return of 10.0%, while MSCI China is down 11.0% in the same period.1 This compares to MSCI ACWI at 14.7%2 or the S&P 500 at 24.3%3. Generally speaking, fundamentals look healthy and, when combined with extremely compelling valuations, we see great potential in the EM asset class.
In this paper, Martin Currie consider China is at a unique turning point where all the following five points are directionally positive:
- Fundamentals
- Valuation
- Positioning
- Politics
- Policy
This is a powerful combination and Martin Currie believes it places EM companies and countries in a strong position. They are set to benefit from strong earnings growth, attractive valuation, a supportive fiscal and political environment and the prospect of a potential normalisation in global/EM asset allocations.
Martin Currie is excited to see how companies and the market respond to this favourable environment in 2024.
Endnotes
- Source: MSCI, as of 30 November 2023. Net total return in US$.
- Source: MSCI, as of 30 November 2023. Net total return in US$.
- Source: FactSet, as of 15 December 2023. Net total return in US$.
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