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Global Multi-Asset Viewpoint
January 15, 2021

Emerging Markets: Poised for a Multi-Year Upcycle

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Global Multi-Asset Viewpoint

Emerging Markets: Poised for a Multi-Year Upcycle

Emerging Markets: Poised for a Multi-Year Upcycle

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January 15, 2021


We believe the 10% outperformance from May 29, 2020 through the end of 2020 marks the end of a five-year range-bound purgatory for emerging equities and the beginning of a multi-year upcycle. Both the near-term cyclical outlook as well as certain longer-term structural trends appear supportive of this. We expect emerging markets to outperform relative to the MSCI World Index (i.e. to developed markets) in 2021 and see substantial room for further outperformance thereafter, consistent with previous upcycles.

For a growth-sensitive asset such as emerging equities, the near-term case is relatively straightforward. As we have previously written, we expect global growth to accelerate in 2021 as COVID-19 immunity is attained later this year and activity returns to normal. With goods and resource exports playing a dominant role in emerging economies, they stand to benefit from continued growth acceleration. We expect emerging economies to grow at 6.9% in 2021, mildly exceeding advanced economies’ pace of 6.5%, even in the absence of comparably large fiscal policy support, and on a stronger comparable base (developed market GDP contracted by -4.6% in 2020, versus -1.0% for EM).1


1 Cap weighted based on MSCI EM.

Managing Director
Global Multi-Asset Team
Head of Global Multi-Asset Team
Global Multi-Asset Team

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