What Else Could Go Wrong for EM Equities

Alexander Redman and Arun Sai of Credit Suisse maintain a positive stance on emerging equities which are at a mid-cycle performance phase vs the US; they note the fundamentals haven’t changed despite recent price action. But whereas a year ago they were looking for positive surprises to lift from the gloom, now investor complacency towards emerging equities and currencies drives them to look at developments that could individually or in combination derail the bull run. The risks they identify include the US exiting NAFTA, 10yr bond yield above 3% or dollar strengthening, a China growth shock, underwhelming US-led global capex rebound, valuation correction driven by US earnings disappointments, +$80/bbl oil, and geopolitical developments in Brazil, N Korea or South Africa. CS client can view the full note on the CS Plus platform.