Emerging market stocks are off to a strong start in 2023 — How the outlook is shaping up

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A weaker dollar, easing inflation, and a reopening in China are expected to be a boon to these markets.

Emerging market stocks are off to a strong start in 2023, even as concerns remain for investors. Emerging markets have underperformed in the past two years, as a rising dollar, interest rate hikes from central banks around the world, and the ongoing impact of the pandemic dented growth. The iShares MSCI Emerging Markets ETF tumbled more than 22% in 2022, and more than 5% the previous year. This year, however, that picture appears to have changed.

He expects that a reopening in the Chinese economy will pick up more meaningfully in the second half, boosting economies in emerging markets. Further, slowing growth in those economies, stemming from tighter monetary policy, could reverse later this year as well. Budaghyan recently opened an upgrade watch on emerging markets, but remains underweight on them within the global equity portfolio.

 

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