Quality Growth Boutique

2021 Emerging Markets Equity Outlook: Opportunities from the Bottom Up


Jin Zhang

Portfolio Manager, Senior Research Analyst


Ben Falcone

Head of Client Portfolio Manager Team Quality Growth Boutique

Portfolio Manager Jin Zhang focuses on companies poised for continued growth in the tech, financials and consumer staples sectors.


  • The IMF is forecasting that large emerging market economies will recover faster than developed economies in 2021. That said, we continue to believe investors should focus more closely on companies than on the macro environment.
  • Asian economies have substantially evolved in recent years, and now present a more attractive range of companies to invest in. For example, many Asian internet businesses retain dominant positions. And others have leading roles in supply chains, such as Taiwan Semiconductor Manufacturing Company (TSMC).
  • In China, regulatory restrictions on FinTech lending have risen, potentially inhibiting e-commerce sites that require merchant exclusivity. That said, the biggest risks to the dominant IT players are upstart competition and existing rivals. New competitors have been able to make inroads by meeting consumers’ needs.
  • We expect some tactical changes in the US political approach with the new administration, but the stance towards China is unlikely to change and distrust may actually get deeper in some sectors, such as technology.
  • Strong franchises are prospering in the consumer space in many EM countries, including Walmart de Mexico, which already had a dominant position in traditional, offline retail, but during the pandemic COVID it strengthened its position by also offering online purchases.
  • While financials stocks have rallied, investors must consider interest rate volatility and increased regulation. Some EM companies in the financials sector, such as India’s HDFC Bank and Kotak Mahindra Bank, are using the latest technologies to better serve their customers, improve efficiency, and are therefore less vulnerable to disruptors.
  • Virus-induced disruptions have accelerated some important business trends, such as the shift to e-commerce, that were already underway. Supply chain shifts that started before COVID are likely to continue, which will put more attention on regions such as Southeast Asia.





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