UBS On-Air: Market Moves
Top of the Morning: Emerging Market equities - Impacts of US trade policy
May 6, 2025
Xingchen Yu, an Emerging Markets Strategist at UBS, delves into the evolving landscape of Emerging Market equities amidst shifting U.S. trade policies. He highlights the recent performance of the MSCI EM index and emphasizes the critical importance of geographic diversification, pointing to promising stocks in Taiwan, India, and Latin America. With discussions on the uncertainty surrounding U.S.-China negotiations and the impact of trade tensions, he offers insights on navigating these turbulent markets and the future outlook for investors.
09:51
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Quick takeaways
- The evolving U.S. trade policy, particularly in relation to China, is creating volatility that impacts emerging market equities significantly.
- Portfolio diversification is essential, with recommendations to allocate around 40% to non-U.S. stocks to mitigate country-specific risks and enhance growth opportunities.
Deep dives
Impact of U.S. Trade Policy on Emerging Markets
Ongoing uncertainties surrounding U.S. trade policy have significantly affected emerging market equities, although a neutral outlook is maintained amid this volatility. High geopolitical tensions and fluctuating tariffs, particularly between the U.S. and China, have created a cautious investment environment. Despite the challenges, some positive signs have emerged, such as both countries seemingly seeking to reduce tensions and re-engage in negotiations. As a result, while the MSCI Emerging Markets index experienced a notable drop, a rebound in several markets, alongside a weakening U.S. dollar, has provided some stability for emerging market currencies and valuations.
