Emerging market equities have struggled to gain traction, underperforming developed market counterparts for the fourth consecutive year. Analysts at JPMorgan highlight a 45% cumulative lag since 2019, underscoring the challenges faced by emerging markets despite occasional short-term rallies.

Key Insights

1. Declining Performance:

   • The MSCI Emerging Markets Index, tracking large- and mid-cap stocks across 24 countries, has erased gains seen in September.
   • These gains were driven by China's stimulus measures aimed at reviving economic activity but proved unsustainable.

2. Valuation and Ownership:

   • Emerging market stocks remain undervalued and under-owned, presenting a potential opportunity for investors with high risk tolerance.

3. Potential Upside Catalysts:

   • US Trade Policy: A softer stance on import tariffs by President-elect Donald Trump could reduce economic uncertainty for emerging markets.
   • China's Stimulus Measures: Aggressive economic support from Beijing could reignite investor confidence.

Geopolitical Risks

While there is room for optimism, uncertainties linger:

• Trump's Trade Plans: Proposed tariffs on China, ranging from 10% to 60%, could exacerbate trade tensions, affecting the world's largest emerging market.
• Executive Actions: Trump's potential focus on trade and geopolitical issues could further unsettle global markets.

Market Strategy

Despite undervaluation, analysts urge caution:

• Emerging markets are not a “buy at any cost” scenario.
• Investors should closely monitor developments in US trade policies and China's economic moves.

Relevant API for Monitoring Emerging Market Trends

To analyze emerging market performance and valuations, the Full Financials API is a valuable resource. It offers:

• Comprehensive financial data for companies across emerging markets.
• Insights into industry and regional trends.