Each month, our experts provide an overview of the key market highlights, an analysis of the macroeconomic environment, and insights into the convictions that shape our investment strategy in emerging market debt.
Emerging markets saw volatility, though geopolitical risk eased after the extended U.S.–Iran ceasefire and Hungary’s pro‑EU election outcome improved European sentiment. The Iran conflict’s impact remains limited, with PMIs and activity data showing resilient EM growth: Asia is supported by AI‑driven investment, and Latin America by strong commodity exports. Inflation stays contained, enabling continued monetary easing, including in Brazil. With geopolitical pressures moderating and fundamentals still constructive, we have increased our tolerance for credit and rate risk, as stress remains confined to a few countries.
Figure of the month
China’s growth reached 5% in the first quarter, exceeding expectations. Despite households still weakened by the decline in the real estate sector and uncertainties around employment, activity is being supported by the strength of the high-tech industry and robust exports (+15%). The war in Iran has so far had a limited impact, mainly reflected in an increase in the value of imports due to higher commodity prices and increased purchases, particularly of coal, to build up inventories. However, the Chinese authorities remain cautious: a prolonged conflict could weigh on global demand and weaken exports, which are currently the main driver of growth.
