Three challenges emerging markets face in the year ahead

Presented by

Thomas Haugaard, Janus Henderson Investors | Daniel Graña, CFA, Janus Henderson Investors | Brendan Maton

About this talk

Emerging markets (EMs) have had a difficult year amid rising US rates, China property woes and the Russia-Ukraine war, but how much is discounted in asset prices? Janus Henderson Investors equity and debt portfolio managers debate the three biggest challenges facing EMs in the face of rising global recession fears: • The stronger dollar poses a challenge for EMs, particularly those countries with high external debt. What factors could make EMs more resilient in a rising US rate environment? EMs with higher real rates and accelerated hiking cycles, for example, could stand in better stead, while export-led economies could benefit from selling comparatively cheaper exports, boosting GDP growth and foreign reserves. • A stronger dollar also means higher imported inflation, a battle against which EM economies are still fighting and a source of civil unrest seen across various countries. For international EM companies, a higher dollar could be a boon for foreign revenues, but costs are another force to contend with. • Geopolitical risks are another source of volatility facing the EM asset class, evident by the Russia-Ukraine war that has reshaped global supply chains – benefitting some countries while costing others. Similarly, EM corporates benefit from outsourcing trends, while domestic innovation through technological advancement can propel a dynamic shift in dominant players in certain markets and opportunities for them to go global. Listen to our debt and equity experts to discover where the bright spots could emerge in EMs as we head towards 2023 and what valuations are telling us. Presented by: – Thomas Haugaard: Portfolio Manager, Emerging Markets Debt Hard Currency – Daniel Graña, CFA: Portfolio Manager, Emerging Market Equity Moderated by: Brendan Maton

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