Macro Trends in Emerging & Frontier Markets | SALT iConnections Asia

TL;DR

Despite challenges such as inflation, COVID-19, and geopolitical tensions, emerging markets in Asia have shown resilience. There is increasing investor interest in private markets and a shift in supply chains, with Vietnam emerging as a potential frontier market.

Transcript

foreign nice to see a great crowd here so I'm Cheryl from City Wire Asia join with me today maybe I should give my penalties uh one or two minutes just to introduce yourself should I go first yeah hi everyone my name is Eric Chung I work for State Street and I am Senior managing director and I run the Alternatives which is more in Focus today and t... Read More

Key Insights

• 🌏 Emerging markets in Asia have shown resilience despite macroeconomic challenges.
• 🔒 Private markets are gaining traction as investors seek stability and diversification.
• 🫤 Vietnam is emerging as a potential frontier market, with similarities to China 20 years ago.
• 🚨 The relationship between the US and China, as well as the trend of deglobalization, may impact the future of emerging markets.
• 🧑‍🏭 Factors like domestic sector reliance and robust current account surpluses contribute to the resilience of certain emerging markets.
• 🧑‍🏭 The performance of emerging markets is not homogeneous, with varying economic factors and financial market dynamics.
• 🚨 The Middle East is becoming a significant part of the emerging market portfolio, driven by trade agreements and financial liberalization.

Questions & Answers

Q: How have emerging markets in Asia responded to the macroeconomic environment?

Emerging markets have reacted faster than developed markets, implementing policy tightening and combating inflation threats. However, the strength of the US dollar and capital outflows have created challenges for these markets.

Q: What are the trends in private markets in Asia?

Private markets are experiencing exponential growth in Asia, particularly in China, India, and Southeast Asia. There is increased investor allocation to private equity and venture capital, driven by the search for stability and diversification.

Q: What factors contribute to the resilience of certain emerging markets?

Some emerging markets, such as Brazil and Mexico, have held up well due to early rate hikes and positive real interest rates. Factors like domestic sector reliance, robust current account surpluses, and commodity cycles have also played a role.

Q: How is the evolving relationship between the United States and China impacting emerging markets?

The trade war and ideological disagreements between the US and China have disrupted supply chains and global trade. This could affect emerging markets' ability to benefit from globalization and may lead to a shift in supply chains to other emerging markets.

Summary & Key Takeaways

• Emerging markets in Asia have reacted faster to macroeconomic challenges, such as policy tightening and inflation threats.

• The strength of the US dollar and higher developed market yields have put pressure on emerging market currencies and led to capital outflows.

• Private markets, particularly in Asia, are attracting investor interest, with hedge funds and alternative strategies gaining traction.