GlobalX – EM Outlook, 2024

According to GlobalX, investors currently have lower allocations to emerging markets (EM) in their portfolios. However, GlobalX believes that now is a great time to reassess this positioning as the asset class has the potential for outperformance in 2024. EM countries make up a significant portion of the global land, population, and GDP growth, but only account for a small percentage of global market capitalization. Looking ahead to 2024, GlobalX is encouraged by the following factors: the attractive valuation of EM equities compared to the US, with the recent level being the lowest since 1971, and the expectation of a weaker US dollar due to the approaching peak of the US monetary policy cycle. While GlobalX acknowledges concerns about slowing Western demand affecting hardware producers in North Asia and materials producers in Latin America, they see many opportunities for stock picking in India, Brazil, Southeast Asia, Greece, and Mexico. Over the past decade, EM equities have only outperformed the S&P twice, but GlobalX believes that after a period of US exceptionalism, emerging markets now offer significant growth potential at discounted valuations. The market is currently significantly underweight in EM, and valuations are below their historical average. GlobalX is eager to take advantage of this potentially unique opportunity.