Latest news with #MSCIEmergingMarketsIndex
CNBC
21-05-2025
- Business
- CNBC
Emerging markets are the next 'bull market' as the sell U.S. narrative gains ground
Emerging markets stocks are in the spotlight again as the "sell U.S." narrative gained fresh momentum, following Moody's recent downgrade of the U.S. credit rating. The Bank of America heralded emerging markets as "the next bull market" recently. "Weaker U.S. dollar, U.S. bond yield top, China economic recovery…nothing will work better than emerging market stocks," Bank of America's team, led by investment strategist Michael Hartnett, said in a note. Similarly, JPMorgan upgraded emerging market equities from neutral to overweight on Monday, citing thawing U.S.-China trade tensions and attractive valuations. A dented confidence in U.S. assets, which kicked into high gear last month marked by a selloff in U.S. Treasurys, equities and greenback, has fueled the bullishness for emerging markets. The MSCI Emerging Markets Index, which tracks large and mid-cap representation across 24 EM countries, is up 8.55% year-to-date. This compares against a 1% climb by the U.S. benchmark S&P 500 across the same period. The difference was more stark in the weeks after April 2, when U.S. President Donald Trump unveiled "reciprocal" tariffs on friends and foes alike. While most benchmarks fell across the board in the immediate days after April 2, the week that followed showed a divergence between emerging market equities and U.S. stocks. Between April 9 to 21, the S&P 500 declined over 5%, while the MSCI Emerging Markets Index rose 7%. Even though U.S. equities and Treasurys rebounded slightly since, the recent Moody's downgrade has reignited traders' concerns. On Monday, the U.S. 30-year Treasury yield briefly grazed above 5% to hit levels not seen since November 2023, while U.S. equities also snapped a six-day winning streak on Tuesday. The events that unfolded recently have reinforced the need for more diverse geographical exposure, said Malcolm Dorson, head of the active investment team at Global X ETFs. "After underperforming the S&P over the past decade, EM equities are uniquely positioned to outperform over the next cycle," he added. "This possible perfect storm stems from a potentially weaker U.S. dollar, extremely low investor positioning, and outsized growth at discounted valuations," he told CNBC. According to data provided by Dorson, in terms of positioning, many U.S. investors have just 3% to 5% in emerging markets, compared to the 10.5% in the MSCI Global Index, which captures the performance of large and mid-cap companies across 23 developed markets. Emerging markets are also trading at 12 times forward earnings "and at a bigger than typical discount" compared to developed markets, statistics from JPMorgan showed. Among emerging markets, Dorson believes India offers the best long-term growth play and spotlighted Argentina's cheap valuation. Sovereign upgrades in countries like Greece and Brazil also helped to make them more attractive, he added. "We could be at the start of a new rotation," said Mohit Mirpuri, equity fund manager at SGMC Capital. "After years of U.S. outperformance, global investors are beginning to look elsewhere for diversification and long-term returns, and emerging markets are firmly back in the conversation," Mirpuri said. A weakening U.S. dollar — pressured by fiscal concerns and rising debt — has historically supported EM flows and FX stability, said a portfolio manager at VanEck, Ola El-Shawarby. But what could set the current optimism apart from previous emerging market rallies that fizzled out? "We've seen EM rallies before that ultimately lost steam, often because they were driven by short-term macro catalysts," said El-Shawarby. This current cycle could be different because of the combination of deeply discounted valuations, historically low investor positioning, and more durable structural progress across key markets, she said, citing India's long-term growth story anchored in domestic demand.
Yahoo
20-05-2025
- Business
- Yahoo
Wells Fargo says to buy U.S. stocks, avoid EMs
-- Wells Fargo told investors in a note Tuesday that it sees an opportune moment to cut exposure to emerging markets equities following recent outperformance, calling it 'an attractive opportunity' if investors are overallocated to the asset class. Despite a strong start to the year for the MSCI Emerging Markets Index, which gained 6.9% year to date compared to a 3.3% decline in the S&P 500 Index, Wells Fargo remains unconvinced. 'We are skeptical,' analysts wrote. 'The long-term EM equity track record has been uninspiring. EM earnings have barely budged since 2007, and index levels remain roughly 15% below their pre-global financial crisis highs.' The firm points to structural issues in emerging markets, including 'political and economic instability, corporate governance concerns, variable regulatory risks, as well as China's excessive debt, slumping property sector, and slowing growth.' While Wells Fargo acknowledges the rally was driven by 'modestly better-than-expected EM economic data prints, signs of bottoming consensus earnings expectations, China stimulus measures, and a broadly weaker U.S. dollar,' it warns that 'the EM sentiment pendulum has swung too far positive.' Trade tensions are another concern. 'In our view, trade frictions only add to the headwinds these markets will face,' the note said. Wells Fargo favors developed markets, noting that 'DM have the benefit of a more stable and predictable regulatory environment, while recent news of increased fiscal spending in Europe is likely to remain a tailwind to investor opinion and returns.' 'We favor reallocating to U.S. Large Cap, U.S. Mid Cap, or Developed Market (DM) ex-U.S. Equities to maintain overall equity exposure,' said Wells Fargo. For risk reduction, 'investors could look to Commodities or select fixed-income investments to reduce equity allocations.' Related articles Wells Fargo says to buy U.S. stocks, avoid EMs Morgan Stanley sees 'more risk than reward' for Asana, downgrades stock to sell 'Best of both worlds:' Wells Fargo starts SAP coverage at Buy
Yahoo
17-05-2025
- Business
- Yahoo
BofA's Hartnett Says EM Stocks Will Outperform Everything Else
(Bloomberg) -- Emerging-market stocks are 'the next bull market' as they benefit from a weaker dollar and an economic recovery in China, according to Bank of America Corp.'s Michael Hartnett. As Coastline Erodes, One California City Considers 'Retreat Now' How a Highway Became San Francisco's Newest Park Maryland's Credit Rating Gets Downgraded as Governor Blames Trump NYC Commuters Brace for Chaos as NJ Transit Strike Looms Power-Hungry Data Centers Are Warming Homes in the Nordics The MSCI Emerging Markets Index excluding China is up 20% from April lows and is set to break out of a 20-year trading range. The benchmark is up about 7% this year as investors seek alternatives to US assets, while S&P 500 is barely changed. 'Nothing will work better than emerging-market stocks,' Hartnett wrote in a note. US equities fell out of favor amid President Donald Trump's attempts to shake up global trade earlier this year. They've since recovered most of their losses and there are signs that investors are returning. Fund managers added $20 billion to US stock funds in the past week, the first inflow to the region in more than a month, according to EPFR Global data cited in the BofA note. Hartnett said he expects US shares to sell off again if the yield on 30-year Treasuries climbs above 5%, from around 4.87%. Still, he said the current yield level 'holds for now.' --With assistance from Michael Msika. Cartoon Network's Last Gasp Microsoft's CEO on How AI Will Remake Every Company, Including His DeepSeek's 'Tech Madman' Founder Is Threatening US Dominance in AI Race As Nuclear Power Makes a Comeback, South Korea Emerges a Winner Why Obesity Drugs Are Getting Cheaper — and Also More Expensive ©2025 Bloomberg L.P.
Gulf Today
14-05-2025
- Business
- Gulf Today
Adnoc Gas joins MSCI index, boosts its investment profile
Adnoc Gas and its subsidiaries on Wednesday announced that its shares have been selected for inclusion in the MSCI Emerging Markets Index after successfully meeting the MSCI's established eligibility criteria. The inclusion will take effect on 2nd June 2025. The MSCI Emerging Markets Index serves as a benchmark for the performance of prominent large and mid-cap publicly listed companies in 24 emerging market countries. Adnoc Gas admitted to the Index, and its inclusion marks a significant milestone in the company's ongoing efforts to enhance its global investment profile. The development is set to increase the company's visibility among international institutional investors, which could improve passive cash inflows by between $300 to $500 million and facilitate a more diversified investor base. Fatema Mohamed Al Nuaimi, Chief Executive Officer at Adnoc Gas, said, 'We are delighted that Adnoc Gas has been included in the MSCI Emerging Market Index. The inclusion supports our ambition to attract a broader and more diversified base of institutional investors and should drive greater liquidity in Adnoc Gas stock.' Al Nuaimi added that the recent $2.84 billion marketed offering, which increased the company's free float by 80 per cent, has already led to a sixfold rise in average daily trading volume. She highlighted that the continued strategic focus on growth is expected to deliver additional value for shareholders through 2025 and beyond. Adnoc Gas' exceptional performance since its 2023 listing is a result of disciplined execution of its growth strategy, which includes a commitment to invest $15 billion in attractive opportunities from 2025 to 2029. The company has a robust pipeline of growth initiatives, including major projects aimed at enhancing its position as a leading global supplier of gas. The strategy aims to deliver a 40 per cent increase in Ebitda between 2023 and 2029, supported by a diversified portfolio of projects designed to maximise value creation. With greater exposure to institutional investors, Adnoc Gas is well-positioned to benefit from increased liquidity, deeper market penetration, and enhanced stock visibility. The company anticipates that the inclusion should result in higher trading volumes and improved investor engagement, further solidifying its position as a leading energy player in the global market. Additionally, Adnoc Gas' efforts to increase the free float, along with its growing strategic investments, should support its long-term goal of enhancing shareholder returns. Adnoc Gas and its subsidiaries, a world-class integrated gas processing and sales company, on Monday announced net income of $1.27 billion and Ebitda of $2.16 billion for the first quarter of 2025, exceeding the equivalent quarter in 2024 by 7 per cent and 4 per cent respectively. The performance was driven firstly by continued demand for domestic gas - up on the equivalent quarter last year - as a result of strong economic growth in the UAE, which lifted the total sales volume.
Business Wire
14-05-2025
- Business
- Business Wire
DEWA PJSC added to the MSCI Emerging Markets Index
DUBAI, United Arab Emirates--(BUSINESS WIRE)--MSCI Inc. (NYSE:MSCI), a leading provider of critical decision support tools and services for the global investment community, announced that Dubai Electricity and Water Authority PJSC (ISIN: AED001801011) (Symbol: DEWA), the Emirate of Dubai's exclusive electricity and water services provider, which is listed on the Dubai Financial Market (DFM), is in the MSCI Emerging Markets Index, effective as of the market close on 30 May 2025. 'DEWA is proud to be the largest listed company on the Dubai Financial Market, with a market capitalization exceeding AED 130 billion. Our inclusion in the MSCI Emerging Markets Index marks a pivotal milestone in DEWA's journey as a publicly listed company and reinforces our growing relevance on the global investment stage. DEWA was among largest additions to the MSCI Emerging Markets Index measured by full company market capitalization. This addition positions DEWA among a select group of emerging market companies sought after by international investors for their stability, scale, and sustainable growth outlook. With a strong track record of delivering predictable dividends, advancing clean energy targets, and supporting Dubai's net zero ambitions, DEWA offers a compelling proposition for long-term global capital. Our fundamentals, governance, and operating standards reflect global best practices. We remain fully committed to delivering consistent growth, operational excellence, and long-term value to all our stakeholders,' said HE Saeed Mohammed Al Tayer, Vice Chairman and MD & CEO of DEWA. The MSCI Emerging Markets Index is a leading global benchmark that captures large- and mid-cap representation across 24 emerging markets, including China, India, Brazil, Saudi Arabia, and the United Arab Emirates. With over 1,400 constituents and approximately US$7 trillion in assets benchmarked to it, the index is widely tracked by passive funds that replicate the performance of market index, and institutional investors worldwide. Being added to the MSCI Emerging Markets Index can trigger automatic capital inflows from passive investment vehicles and index-linked funds that replicate the index composition. These flows are typically non-discretionary, creating steady buy-side demand for the stock from the date of inclusion. As a new constituent, DEWA is expected to benefit from increased visibility, enhanced trading liquidity, and passive inflows from index-linked investment products. Index inclusion typically prompts buying activity from passive investment funds that mirror MSCI benchmarks.
