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.
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US-China Tariffs Impact EM
- The US-China tariffs have caused notable market volatility but are unlikely permanent.
- Current emerging market equities hover near neutral valuation levels amid ongoing trade talks.
Diversify for Risk Management
- Diversify portfolios geographically to mitigate country-specific risks.
- Allocate about 40% to non-US international stocks including emerging markets for growth and currency benefits.
EM Market Preferences
- Taiwan and India stand out within emerging markets due to strong sector growth and earnings recovery potential.
- Mainland China remains neutral with risks from tariffs and potential financial decoupling still present.