UBS Opinion Leader and Global Head, EM Cross Asset Strategy – Bhanu Baweja – examines a possible EM turnaround. Over the course of three reports, Bhanu investigates what the anatomy of this EM rally might tell us about sustainability, whether central bank actions have permanently turned things around for EM currencies and commodities, and then takes a deep-dive into EM valuations.
What does the sectoral performance of EM tell us about the future of this rally? To what extent can declining term premia and risk premia support from here?
EM currencies have been the biggest contributors to EM returns this year. The turnaround in commodities has been a big help, as has reinforced dovishness from the Fed. How do we know if this will last?
Most investors see EM as unloved and cheap. But traditional fair value models don’t work at a time of structural change. So, what does?
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