Investors cautious on emerging market outlook

24 June 2020

By Tim Pemberton

More investors in emerging markets (EM) expect economic recovery in 2021 than in the second half of this year, according to a major new survey from HSBC Global Research.

The bank’s inaugural EM Sentiment Survey finds that 47 per cent of investors think EM economic activity will slow over the next 12 months, compared with 37 per cent who think it will accelerate.

Some 213 investors from 198 institutions representing more than USD600 billion of assets under management in EM were surveyed by research firm Survation in the three weeks to 2 June. Dr Murat Ulgen, Global Head of EM Research, and a team of HSBC economists and strategists analysed the findings.

The survey also explores investor attitudes towards different markets, asset classes, and environmental, social and governance (ESG) issues.

Investors are willing to take only modest risk for the time being, and prefer to hold on to relatively high levels of cash, the survey finds. And they see Asia as the region with the most favourable outlook across foreign exchange, rates, credit and equities.

Although EM focus less on environmental, social and governance issues than some developed countries, nearly a third of investors surveyed either directly or indirectly run an ESG portfolio. And when asked about ESG risks, respondents said they are most worried about climate change, inequality and minority shareholder protection.

The survey represents a further investment by HSBC into its EM research capabilities.

David May, Global Head of Research, HSBC, says: “Now more than ever our clients are looking for clear views and thought-provoking insight. Our new survey offers another way for clients to understand the key trends affecting emerging markets so that they can make informed investment decisions.

“We have a unique perspective because we have a team of EM experts based on the ground in some of the fastest growing markets in the world.”

The EM Sentiment Survey will be updated every quarter to gauge shifts in sentiment.

Read further analysis of the inaugural findings on HSBC’s Global Banking & Markets website (opens in new window) (opens in new window) (opens in new window) (opens in new window) (opens in new window) (opens in new window) (opens in new window) (opens in new window) (opens in new window)