'Stars Align' For Emerging Markets: Morgan Stanley

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Transcript

00:00We've been talking about a revival of emerging markets for quite some time now, but that hasn't really happened.

00:07Of course, but we're starting to really see the stars align now.

00:10You've seen the performance year-to-date. We've seen the dollar weakening quite considerably.

00:15That's really given a tailwind to some of our markets.

00:18If we look at the performance of Brazil, even India now, these are some of the opportunities that we're seeing in EM,

00:25and we're starting to see it's a push-pull dynamic that's really taking shape.

00:29So we see diversification coming out of the U.S., but you want that opportunity in EM, too, and that's taking shape.

00:36So if we look at some of the long-term growth dynamics in places like India or even the China 3.0 story,

00:42those are some of the areas we really like right now.

00:46You talked about how EMs are benefiting from the weaker dollar.

00:49How much more downside to the U.S. do you think from here?

00:54We do really think there's still some way to go.

00:57We could go sideways here for a while, but again, the growth rate differential between developed markets and EM is continuing to widen out.

01:05If we do see a slowdown in the U.S., it's that growth differential.

01:08We still see nice growth numbers coming out of many of the markets.

01:12In places like India, we see interest rates coming down a bit, so that's also helping.

01:17And if we do see even a few percentage points coming off of that dollar, that's just another tailwind to help us here.

01:22So I think there's multiple factors that are really starting to align that really support that EM story.

01:29And again, it's not just one market we're looking at, and this really speaks to the active management dynamic that we see within EM also.

01:36I can talk about different opportunities in North Asia, South Asia.

01:40Middle East is a really interesting story right now, and even Latin America.

01:44So we have multiple factors going for us, and that active management really plays out for us here.