Emerging Markets Equity Outlook Report 2023 | RBC Global Asset Management

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Decline

by RBC Emerging Markets Equity team
December 14, 2022

This year we present the RBC Emerging Markets Equity team’s eleventh Outlook report.

After what has been a notably challenging year for emerging markets ("EM") equities, we use this report as an opportunity to reflect on the key developments within the asset class and set out our thinking for the environment ahead. We also look to address the key questions and concerns that we have been hearing from our clients.

In this year’s report, we cover a broad range of topics, from valuations and earnings, to EM growth, currencies and inflation. We also assess the relative outlook for EM countries, sectors and styles, focusing on those areas where we identify extremes. While our portfolio positioning continues to be driven by bottom-up stock picking and long-term structural views, we use our outlook to increase or decrease country and sector weights at the margin.

We also review developments within our portfolio themes. These themes help position our portfolios in areas of long-term structural growth which we feel is particularly relevant in the new environment, where low interest rates and easy money are now firmly behind us and growth will be increasingly challenging to come by.

Given the substantial weight of China within the MSCI EM Index, and thus its impact on the performance of the overall asset class, we dedicate a chapter to assessing the drivers behind China’s recent underperformance and lay out our thinking for its path ahead.

Finally, environmental, social and governance (“ESG”) factors and sustainability-related reforms are becoming increasingly important for countries in EM. In this report we highlight some positive developments in specific emerging countries in terms of ESG-related reforms.

We hope you enjoy our insights and we look forward to the year ahead.

Read the full RBC Emerging Markets Equity Outlook Report.

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