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Development Trend of International Trade in 2020


From a bottom-up, emerging markets are still very attractive. Valuations are still interesting and within the range that we consider attractive for us.

Growth is there. Expectations for growth for this year, 2020, are higher than developed markets. And valuations are more attractive versus developed markets. Lower rates in the U.S. can really help emerging countries to continue to bring rates down as we saw in 2019. Inflation is really tame across the board in emerging markets with a couple of exceptions. But nevertheless, really, really helpful there as well. So consumption should continue. Investments in the space should continue. That's all good. What could be a challenge for us in emerging markets in 2020 is sort of the lack of resolution in terms of the U.S.-China trade war -- probably even more from a sentiment point of view at this point versus actual impact. I think a lot of the Chinese companies are really trying to manage and branch out in terms of their dependency on the U.S. We're seeing that already. It happened last year, and I think it will continue.

And then an additional challenge in 2020 is U.S. elections. That could bring volatility to markets in general. And obviously global markets because they're all linked.

We foresee volatility in the U.S. market, and that will probably trickle down to emerging markets as well and have an impact in the emerging space. But those are all really headline news challenges, and that's nothing new for emerging markets. I think from a really fundamental point of view, a long-term outlook, we continue to be very positive in the emerging markets space. Every country in emerging markets is in a different stage in terms of their economic cycle. In some, we're seeing that inflection starting to accelerate - such as Brazil.

Then there are others like China, which had been in that acceleration trend but got a bit of a setback because of the trade war. But we saw enough policies coming through to really help the economy - so the trend there continues to be positive as well. Then there are others where we are not seeing that positive trend yet, such as India - and there are some structural issues there in the economy in that country.


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