Dec 12, 2019

Fund managers predict strong growth next year for emerging markets

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Data:; Chart: Axios Visuals

After years of U.S. outperformance, fund managers say they expect American assets to deliver gains in line with international markets in 2020.

The big picture: Firms including BlackRock, BofA and JPMorgan say they are particularly bullish on emerging market equities, which have been unloved in 2019.

What to watch: They predict strong growth next year for EM countries, even as China's growth is widely expected to slow below 6%.

  • Big EM economies like Brazil, Russia, Mexico and South Africa are poised to see rebounds in growth after struggling in 2019.

Threat level: While his base case is that the growth decline has bottomed, a major risk to EM and global economic strength is India, BofA's senior global economist Aditya Bhave tells Axios. The country has seen its GDP fall from 7% in the second quarter of 2018 to 4.5% in Q2 this year.

  • "It's really concerning and risk is to the downside," Bhave says. "The slowdown is idiosyncratic and it's quite severe."

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Investors returned to emerging markets in December

Illustration: Eniola Odetunde/Axios

Foreign investors flocked back to emerging markets in December, data from the Institute of International Finance shows.

What happened: IIF estimates EM stocks and bonds drew $30.7 billion from foreigners in December, a significant increase from the $19.9 billion in November, and the continuation of a recovery from EM's summer slump.

Go deeperArrowJan 8, 2020

World Bank cuts growth forecast for fourth time in a row

Photo: Win McNamee/Getty Images

The World Bank cut its global growth forecast for the fourth straight time on Wednesday, reducing expectations by 0.2 percentage points each year for 2019, 2020 and 2021.

"Global economic growth is forecast to edge up to 2.5% in 2020 as investment and trade gradually recover from last year’s significant weakness but downward risks persist. ... U.S. growth is forecast to slow to 1.8% this year, reflecting the negative impact of earlier tariff increases and elevated uncertainty."
— World Bank statement on its Global Economic Prospects report
Go deeperArrowJan 9, 2020

Asset managers urge caution in 2020

Illustration: Eniola Odetunde/Axios

Investors can expect higher stock prices but also a lot of potential potholes in 2020, according to the investment forecasts of major asset managers.

What they're saying: "[I]n 2020 the margin for error — and opportunity — will likely be as small as it’s been in a very long time," top strategists at State Street Global Advisors wrote in their 2020 outlook.

Go deeperArrowDec 12, 2019