UBS On-Air: Market Moves Top of the Morning: Emerging markets - performance meets diversification
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Oct 1, 2025 Alejo Czerwonko, Chief Investment Officer for Emerging Markets Americas at UBS, shares his insights on the importance of the Fed’s rate-cutting cycle for emerging market investors. He highlights promising opportunities in equities, fixed income, and currencies, emphasizing fair valuations and solid earnings in markets like China and India. Alejo also discusses key risks such as potential US inflation and global economic slowdowns that could impact emerging market performance, making it a must-listen for investment enthusiasts.
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Liquidity Drives EM Capital Flows
- Global liquidity, driven by developed-market monetary policy, better explains capital flows into emerging markets than domestic policies alone.
- Fed rate cuts historically support EM assets, especially if the easing occurs outside of recessions.
Columbia Course Shapes EM View
- Alejo teaches a graduate course at Columbia on investing in emerging markets and uses case studies to contrast liquidity and investment theories.
- He concludes liquidity cycles driven by developed-market policy better explain historical EM capital flows.
Position For Fed Easing Benefits
- Expect the Fed to cut rates and favor emerging market assets if the easing happens without a US recession.
- Consider EM exposure now because Fed easing tends to lower the dollar and support risk assets.