EM And Asia Should Continue To Outperform DM, Despite China Slowdown: BNP Paribas

Aided by a recovery in nominal GDP growth, a recovery in earnings profile, and still-cheap valuations of EMs and Asia relative to DMs, an analyst at BNP Paribas anticipates that the recent outperformances of EMs and Asia relative to DMs should continue. Manishi Raychaudhuri states in his June 15 “Asia Strategy” research note that top-line recovery should lead to ROE recovery in Asia.

Emerging markets likely to continue outperformance vs. developed markets

Raychaudhuri points out that on the back of a sharp bounce-back in Brazil and other parts of Latin America, EMs and Asia have outperformed DMs since the late January bottom. However, citing near-term risks, he points out that the equity markets seem somewhat complacent about the near-term risks arising...