More stimulus in China will impact emerging markets through a weaker US dollar and stabilizing commodities demand, according to Brandywine Global Investment Management.
(Bloomberg) — More stimulus in China will impact emerging markets through a weaker US dollar and stabilizing commodities demand, according to Brandywine Global Investment Management.
“The US dollar will come under pressure this year as relative growth shifts in favor of China versus the US slowing down,” said portfolio manager Jack McIntyre on Bloomberg TV. This may be “a little bit of a tailwind for emerging markets.”
Improving growth in China is also expected to stabilize commodities demand, benefiting exporters in Latin America, McIntyre added.
“China is still a dominant theme in emerging markets,” the portfolio manager said. McIntyre continues to maintain a “significant overweight” position in emerging market assets.
Some key takeaways from McIntyre:
- Inflation will be the critical variable for emerging markets in 2023 and 2024
- Emerging market central banks in a position to cut interest rates will not deviate capital currently gravitating toward those markets
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