LIVE MARKETS-EM equities outperformance still has legs - JPM

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EM EQUITIES OUTPERFORMANCE STILL HAS LEGS - JPM

It's been a good start to the year for emerging markets equities; they're outperforming their developed markets (DM) counterparts by 5% so far in U.S. dollar terms, and JP Morgan expects this winning streak to continue.

Firstly they flag that more than half of EM central banks they track are still expected to cut more from here, noting continued tightening in EM bond yield and credit yield spreads versus DM.

Dollar softness will also help matters. Elsewhere, China activity is underwhelming and prospects of a rebound are thin on the ground.

"Therefore, any improvement on this front, or a more forceful stimulus rollout, would be a positive surprise," writes JPM.

AI is still performing strongly in the EM trade, they add, surging ahead of U.S. AI baskets while still showing "considerably lower multiples, in relative terms."

In fact, EM equity valuations at 14x forward P/E are looking quite sweet compared to DM's 20x.

"In addition, EM EPS revisions are outright positive these days, building on 14% earnings growth in 2025, and investor positioning in EM equities remains rather low."

But what of a recent uptick in geopolitical uncertainty and those pesky tariff threats?

Well those factors would be more of a threat for U.S. and European stocks, rather than EM.

JPM turned bullish on emerging markets last year, and they see China and Korea as positive calls, with India, Brazil and South Africa also highlighted.

(Lucy Raitano)

EARLIER ON LIVE MARKETS:

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MATERIALS INDEX CLOSING IN ON 18-YEAR HIGH CLICK HERE

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