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By Eric Anderson, Managing Partner & Head of Investment Solutions at Milltrust International LLP

Since the beginning of the year, Emerging Market equities have outperformed Developed Market equities, Emerging Market currencies have outperformed the US Dollar, Emerging Market local currency government bonds have outperformed Developed Market bonds and commodities are up; these factors are creating positive earnings momentum for companies in the Emerging Markets right now.

The narrative has changed; this is not a short-lived rally. From a global standpoint, the global economy has now had over two years to digest the fall in commodity prices, the rise in the US Dollar, and the slowdown in Chinese growth. Today, the global economy has regained some positive momentum as the policy adjustments of recent years have begun reaching the economies of both developed and emerging countries. The data indicates strengthening labour markets in Europe with consumer spending growth accelerating in both the US and Europe. Chinese economic data remains mixed but improving in many aspects with risks of a hard-landing only a very remote possibility. As the drag from falling commodity prices and the strong dollar continues to fade, we will also start seeing improvements in global trade and manufacturing; both hugely important for Emerging Markets.

Given how much the Emerging Markets feed off the global economy, this bodes very well for the short-to-medium-term outlook for ......................

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