Eastspring Investments argues that emerging market (EM) equities present a compelling investment opportunity due to several converging factors: an increase in capital expenditure, robust economic growth forecasts, and improving governance in key EM countries. Additionally, valuations are attractive relative to developed markets, and historical patterns suggest EM equities tend to benefit from periods of Fed rate cuts and a weaker US dollar.

“The components of a country’s GDP are consumption, investment, government spending and net exports. Looking forward for the next few years, we observe that all these components for this continued growth premium remain fairly robust across EMs and on an upward trend relative to DMs. Consensus data predict EMs to grow by around 5% on the whole,” said Samuel Bentley, Client Portfolio Manager, Equities, at Eastspring Investments.

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