The first half of 2023 has brought a bumpy road of positive performance to emerging market (EM) equities. The year began with a bang, as global allocators bought the headlines around China’s reopening but then slowed down as immediate economic data disappointed lofty expectations. However, the key theses are still in play, in our view, and data show that in 87.5% (14 of 16) of up-years for both developed markets (DMs) and EMs since 1990, EMs (as measured by the MSCI Emerging Markets Index) have beaten DMs (MSCI World Index).1 We believe in a second half comeback for several reasons, which we discuss below.
Key Takeaways
- Emerging market stocks appear poised for a catch-up to DM peers based on divergent growth paths, attractive valuations, and U.S. dollar weakness.
Fidelity Emerging Markets Limited (LON:FEML) is an investment trust that aims to achieve long-term capital growth from an actively managed portfolio made up primarily of securities and financial instruments providing exposure to emerging markets companies, both listed and unlisted.