Navigating Emerging Markets Through the Ballot Boxes

As global elections unfold, how will they shape emerging markets? Are they an entry point for investors seeking growth and diversification?

Geopolitics in an election-heavy year

2024 will see 40 countries going into national elections, representing over 40% of the global population.

The outcomes of these elections could affect the future economic path, and international relations, of established leaders like US/Europe and of emerging powers in Asia and Latin America.

Politics in emerging powers like China, India, and Latin America will shape global geopolitics.

In our view, investors looking for higher returns in emerging markets should assess country-specific factors such as political stability, public finances and economic growth.

Geopolitics in an election-heavy year

2024: the biggest election year - Data as of January 2024

Investment opportunities in a fragmented world

We are optimistic about emerging markets in 2024.

After last year's rally, investors seeking opportunities should consider turning their attention to emerging regions, leveraging on their growth advantage and robust local consumption and trade dynamic.

The current outlook for the asset class is increasingly favourable, with certain emerging economies strategically positioned for growth. Projections suggests that the growth premium favouring emerging markets is likely to increase.

EM fixed income EM equity ESG

A source of income with appealing yields

The current returns on emerging markets hard currency bonds is now more appealing than in previous years. With the possibility of the Fed lowering interest rates, we maintain a positive stance on emerging markets bonds and currencies, with a selective approach and focusing on countries that have been successful in anchoring inflation and are well-positioned in the easing cycle.

Duration and yield in local currency - Data as of 30 January 2024

Room for optimism in 2024

We are positive on the asset class, driven by several supportive factors. The growth premium is increasingly favouring emerging markets over developed markets, the capex cycle is expected to tilt in favour of emerging markets, valuations remain attractive both in absolute and relative terms, and there is a positive trajectory in the earnings cycle.

EM-DM growth (4y average) advanced by 1y - Data as of 26 January 2024

A growing theme for Emerging Markets

Increasing investor demand for green, social and sustainability-linked bonds could help achieve a green transition in emerging markets and low-income countries. In these regions, where the impacts of climate change are particularly pronounced, the growing sustainable bond market is becoming increasingly vital for their economic development.

What are the key EM themes to keep an eye on?

1. EM growth premium

In a weaker global economy, EM will remain resilient but with higher fragmentation. EM-DM growth differentials to stay wide in 2024.

2. Easier monetary policies

Some EM central banks have begun easing policies with room for more cuts. Fed support should benefit EM, but inflation remains a challenge amid energy transition, geopolitical tensions, and economic shifts.

3. Asia in focus

Asia looks to lead investments flows during the great reallocation. India’s economic outlook remains positive, while China’s GDP growth may slow to around 3% in 2025 due to structural shifts and deleveraging.

4. Risks to watch

Key risks includes geopolitical tensions and major elections in 2024. Investors need to watch out for idiosyncratic stories and internal vulnerabilities that could increase EM fragmentation.

Discover our Emerging Markets Strategies

Explore

Explore more about this topic at our research center

Geopolitics in an election-heavy year

China’s pivot: steering through turbulence to sustainability

Institutional - Market Stories - Outlook 2024 - Outerblue talks research - what awaites emerging markets in 2024?

What awaits emerging markets in 2024?

rc-2024.03.27-unveiling-the-value-of-em-debt-slider

Unveiling value EM Debt

Welcome to Amundi Canada

To provide you with the most relevant information, we have developed an interface to present the full range of products available for your investor profile and country of residence.

1
Profile
2
Cookies

Your profile: Institutional investor

Visit this website if you invest as, or select investments on behalf of, an institution such as a sovereign entity, a pension fund or an insurer.

Choose your language:

You are entering this website as an “accredited investor”. It is important that you read this page before proceeding further.

This website is provided by Amundi Canada Inc. (“Amundi Canada”). Amundi Canada is registered under NRD number 27710 as: (1) a portfolio manager in the provinces of Alberta, British Columbia, Nova Scotia, Ontario and Québec; (2) an exempt market dealer in Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, Québec and Saskatchewan; and (3) an investment fund manager in Ontario and Québec. Its head office is located at 2000 McGill College Avenue, Suite 1920, Montreal (Québec), H3A 3H3.

You are connecting to this site as an “accredited investor”, as defined in National Instrument 45-106 Prospectus Exemptions, and you are either residing in Canada or you are accessing the website from Canada. If you are not an “accredited investor”, we invite you to leave this website. Furthermore, if you are from a country with a dedicated “Amundi” website which is not this website, you are invited to access the site for your country.

More particularly, this site is NOT intended for citizens or residents of the United States of America or “U.S. Persons”, as defined in “Regulation S” of the Securities and Exchange Commission under the U.S. Securities Act of 1933. The investment products described on this website are not registered under U.S. federal securities laws or any other relevant U.S. state laws. Consequently, no investment product may be offered or sold directly or indirectly in the United States of America (including in U.S. territories and possessions), to or to the benefit of residents and citizens of the United States of America and to “U.S. Persons”. If you are a “US Person”, you are not authorized to access this site and you are invited to log onto amundi.com/usinvestors.

The information available on this website is provided for informational purposes only. None of information contained on this website constitutes an offer to purchase or a solicitation to sell securities, investment advice on the purchase or sale of a security, an offer or solicitation by Amundi Canada or any of its affiliates to provide investment advice or a financial, legal, fiscal or investment service or to buy or sell securities or other financial instruments. The information contained on this website originates from Amundi Canada or from sources believed by Amundi Canada to be reliable. Amundi Canada has not independently verified such information or otherwise made any related investigation. Neither Amundi Canada, nor its affiliates, partners, principals, directors, officers, agents, employees and representatives can warrant or declare, implicitly or explicitly, that the information provided herein is exact, complete or up to date. Amundi Canada disclaims all liability relating to the information on this website.

The information contained on this website is not meant to be distributed or used by any person or entity in a jurisdiction where such distribution or use would be contrary to legal or regulatory requirements, or would require that Amundi Canada or its affiliates have to satisfy registration or prospectus requirements in such jurisdiction.

The information shall not, without prior written approval of Amundi Canada, be copied, reproduced, modified, or distributed, to any third person or entity in any country.

Investment involves risk. Past performances do not guarantee or indication of future returns. The value of an investment in any security or financial product may fluctuate due, namely, to market conditions, forecasts on the economy, stock market, bond market or economic trends.