Emerging Markets
Prime Minister Narendra Modi won a third term and will become the third longest-serving prime minister of India. While investors responded negatively to the BJP’s loss of an outright majority, Modi and the NDA will continue to perpetuate the reforms they have already put into motion. The result also affirms that Indian democracy continues to thrive, contrary to the narrative that Modi had formed an authoritarian grip on the country, a view we always rejected.
MORENA has once again swept the Mexican election: Claudia Sheinbaum will be president, with little to no constraint in Congress. All in all, Mexican politics will remain stable and overall supportive of markets. In the medium term, fiscal spending will return to conservatism and the constitutional reforms will lead to mixed fiscal and economic repercussions. In the long term, however, fiscal and institutional risks will rise. We advise investors to remain overweight Mexican risk assets relative to EM in cyclical and structural time horizons, but prepare for Mexican markets to sell off in absolute and relative terms in the next couple of months.
Our Portfolio Allocation Summary for June 2024.
European stocks have massively underperformed US ones since the GFC. Demographics and productivity say this trend will continue, but is that really so?
The US economy is in the “Overheating” phase, so stronger growth brings higher inflation. Tight monetary policy means recession is still likely over the next 12 months. Stay defensive.
In this report, we gauge the outlook for the dollar given client visits in Africa.
