Viktor Schvets of Macquarie with another superb note. I agree with this 100%:
EMs are likely to continue delivering lower returns with higher vols
- Next month marks the 11th anniversary of the highest relative peak of EM vsDM equityperformance. Powered by the post-GFC recoveryand China stimuli, EMs were resting at double the levels of’04. It was a legacy of seven years of relatively uninterrupted EM outperformance. It is not surprising therefore that having lost ~50% of relative value over the last decade and ~17%YTD, EM investors feel that their time is finally coming back. We continue to disagree.