Morgan Stanley: The era of emerging markets has begun

The Morgan Stanley Investment Authority predicted that this decade’s winner would be emerging market shares.

Compared to the US markets, positive expectations for developing countries are increasing.

Jitania Kandhari, Emerging Markets Research Manager at Morgan Stanley Investment Administration Unit, predicted that emerging market stocks have attractive valuations and that countries such as India will grow more adequately than the United States.

Kandhari stated that there is a new leader of the market every ten years.

The said asset class made a strong start to this year. The MSCI Emerging Markets Index rose 8.6 percent. In the US, the benchmark index rose 4.7 percent. China’s abandonment of the Zero Kovid policy and the investor positioning of the Central Banks to end the aggressive interest rate hikes were influential in this rise.

Kandhari stated that the growth gap will trigger the rally in the asset class.

According to Bloomberg’s survey, emerging economies are expected to grow by 4.1 percent and 4.4 percent in 2023 and 2024, respectively. The expectations for the USA are 0.5 percent and 1.2 percent, respectively.

According to the report based on EPFR Global data by Bank of America, with the opening of China, there was a record entry of 12.7 billion dollars in the bond and stock markets of developing countries in the week ending January 18. In this period, there was an outflow of 5.8 billion dollars from US stocks.

Stating that it is necessary to be selective amid emerging markets, Kandhari said, “India is one of the favourites. Everything that does not benefit China seems to be in favor of India. The country has a growing population compared to China and has lower debt than China. “Deglobalization is at the forefront of the ‘storm’ while other emerging market markets benefit from it, such as Indonesia, Thailand, Vietnam and Mexico.” he said.

Kandhari stated that moving away from China in supply chains stimulates manufacturing capacity in other countries, which will trigger economic growth.

Stating that things may not go well in every country, however, Kandhari said, “A storm in Ghana, Sri Lanka or Pajistan will not have a disproportionate effect on developing countries. I think there is less risk compared to the past. Smaller countries are more risky, but these countries are more than 3 percent of global growth. make up less,” he said.