Carmignac's Hovasse: Trade war de-escalation needed for more constructive EM outlook

In 2018, emerging markets experienced a risk-off period, taking a hit from a combination of rising US interest rates, dollar appreciation and major political tensions pitting the US against China, Russia and Turkey.

Indeed, the trade war engineered by the White House showed no signs of abating and its impact on growth was felt in Asia, where PMI surveys were down. The tariff issue has masked the reality of a global business cycle that is losing momentum. This was particularly observable in China, where the latest macroeconomic data is underwhelming. Beijing is trying to support the economy with countercyclical policies. But China's flexibility is increasingly limited as the country has ceased to run a current account surplus and long-term financing such as foreign direct investment has decreased,...