Where are the bright spots in emerging markets?

Emerging markets equities declined in August, dragged down by disappointing Chinese economic data and strength in the US dollar. Since then, Beijing has introduced further policy support and data points have marginally improved.

While China’s growth outlook remains crucial to EM performance, there’s more to emerging markets than China. India and Indonesia offer attractive opportunities too, in our view.

China’s accelerating policy response should improve the economy.

  • Housing measures introduced in late August including the cut in mortgage down payment ratios and relaxation of the “first-time homebuyer” definition were impactful.
  • Economic indicators such as manufacturing activity and inflation appear to be bottoming out.
  • We expect the policy impact to be more evident in the upcoming data, and believe recent policy support can push GDP growth close to the official target this year.

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.

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