Unsubscribe

Confirm you would like to unsubscribe from this list

Remove strategy

Confirm you would like to remove this strategy from your list

Welcome to Thornburg

Please select your location and role to help personalize the site.
Please review our Terms & Conditions

For Institutional / Wholesale / Professional Clients

The content on this website is intended for institutional and professional investors in the United States only and is not suitable for individual investors or non-U.S. entities. Institutional and professional investors include pension funds, investment companies registered under the Investment Company Act of 1940, financial intermediaries, consultants, endowments and foundations, and investment advisors registered under the Investment Advisors Act of 1940.

TERMS AND CONDITIONS OF USE

Please read the information below. By accessing this web site of Thornburg Investment Management, Inc. ("Thornburg" or "we"), you acknowledge that you understand and accept the following terms and conditions of use.

Disclaimers

Products or services mentioned on this site are subject to legal and regulatory requirements in applicable jurisdictions and may not be licensed or available in all jurisdictions and there may be restrictions or limitations to whom this information may be made available. Unless otherwise indicated, no regulator or government authority has reviewed the information or the merits of the products and services referenced herein. Past performance is not a reliable indicator of future performance. Investments carry risks, including possible loss of principal.

Reference to a fund or security anywhere on this website is not a recommendation to buy, sell or hold that or any other security. The information is not a complete analysis of every material fact concerning any market, industry, or investment, nor is it intended to predict the performance of any investment or market.

All opinions and estimates included on this website constitute judgements of Thornburg as at the date of this website and are subject to change without notice.

All information and contents of this website are furnished "as is." Data has been obtained from sources considered reliable, but Thornburg makes no representation as to the completeness or accuracy of such information and has no obligation to provide updates or changes. Thornburg disclaims, to the fullest extent of the law, any implied or express warranty of any kind, including without limitation the implied warranties of merchantability, fitness for a particular purpose and non-infringement.

If you live in a state that does not allow disclaimers of implied warranties, our disclaimer may not apply to you.

Although Thornburg intends the information contained in this website to be accurate and reliable, errors sometimes occur. Thornburg does not warrant that the information to be free of errors, that the functions contained in the site will be uninterrupted, that defects will be corrected or that the site and servers are free from viruses or other harmful components. You agree that you are responsible for the means you use to access this website and understand that your hardware, software, the Internet, your Internet service provider, and other third parties involved in connecting you to our website may not perform as intended or desired. We also disclaim responsibility for damages third parties may cause to you through the use of this website, whether intentional or unintentional. For example, you understand that hackers could breach our security procedures, and that we will not be responsible for any related damages.

Thornburg Investment Management, Inc. is regulated by the U.S. Securities and Exchange under U.S. laws which may differ materially from laws in other jurisdictions.

Online Privacy and Cookie Policy

Please review our Online Privacy and Cookie Policy, which is hereby incorporated by reference as part of these terms and conditions.

Third Party Content

Certain website's content has been obtained from sources that Thornburg believes to be reliable as of the date presented but Thornburg cannot guarantee the accuracy, timeliness, completeness, or suitability for use of such content. The content does not take into account individual investor's circumstances, objectives or needs. The content is not intended as an offer or solicitation with respect to the purchase or sale of any security or other financial instrument or any investment management services, nor does it constitute investment advice and should not be used as the basis for any investment decision.

Suitability

No determination has been made regarding the suitability of any securities, financial instruments or strategies for any investor. The website's content is provided on the basis and subject to the explanations, caveats and warnings set out in this notice and elsewhere herein. The website's content does not purport to provide any legal, tax or accounting advice. Any discussion of risk management is intended to describe Thornburg's efforts to monitor and manage risk but does not imply low risk.

Limited License and Restrictions on Use

Except as otherwise stated in these terms of use or as expressly authorized by Thornburg in writing, you may not:

  • Modify, copy, distribute, transmit, post, display, perform, reproduce, publish, broadcast, license, create derivative works from, transfer, sell, or exploit any reports, data, information, content, software, RSS and podcast feeds, products, services, or other materials (collectively, "Materials") on, generated by or obtained from this website, whether through links or otherwise;
  • Redeliver any page, text, image or Materials on this website using "framing" or other technology;
  • Engage in any conduct that could damage, disable, or overburden (i) this website, (ii) any Materials or services provided through this website, or (iii) any systems, networks, servers, or accounts related to this website, including without limitation, using devices or software that provide repeated automated access to this website, other than those made generally available by Thornburg;
  • Probe, scan, or test the vulnerability of any Materials, services, systems, networks, servers, or accounts related to this website or attempt to gain unauthorized access to Materials, services, systems, networks, servers, or accounts connected or associated with this website through hacking, password or data mining, or any other means of circumventing any access-limiting, user authentication or security device of any Materials, services, systems, networks, servers, or accounts related to this website; or
  • Modify, copy, obscure, remove or display the Thornburg name, logo, trademarks, notices or images without Thornburg's express written permission. To obtain such permission, you may e-mail us at info@thornburg.com.

Severability, Governing Law

Failure by Thornburg to enforce any provision(s) of these terms and conditions shall not be construed as a waiver of any provision or right. This website is controlled and operated by Thornburg from its offices in Santa Fe, New Mexico. The laws of the State of New Mexico govern these terms and conditions. If you take legal action relating to these terms and conditions, you agree to file such action only in state or federal court in New Mexico and you consent and submit to the personal jurisdiction of those courts for the purposes of litigating any such action.

Termination

You acknowledge and agree that Thornburg may restrict, suspend or terminate these terms and conditions or your access to, and use, of the all or any part this website, including any links to third-party sites, at any time, with or without cause, including but not limited to any breach of these terms and conditions, in Thornburg's absolute discretion and without prior notice or liability.

Decline

Give Us a Call

Fund Operations
800.847.0200

FIND ANOTHER CONTACT
Markets

Post-Pandemic Emerging Markets Set to Snap Back in 2021

Charles Wilson, PhD
Portfolio Manager and Managing Director
8 Jan 2021
4 min read

Tactical and structural tailwinds should drive growth in EM equities in 2021. But a style-balanced approach will be crucial to handle market volatility.

The structural drivers supporting emerging market stocks remain intact, while the cyclical tailwinds are stronger than they were prior to the COVID-19 black swan. The MSCI Emerging Markets (EM) Index performance over the last few months reflects the bullishness undergirding developing country stocks, but a look under the hood reveals that regional, sector and style rotations are underway. A balanced approach to value and growth factors can help to squeeze more out of a broad, if uneven, market upturn.

Value vs. Growth Equities Rotation Occurs Frequently in Emerging Markets

Source: Bloomberg

Rising incomes and an expanding middle class across the developing world are fueling increasingly powerful domestic consumption-led growth models. At the same time, expansionary global Purchasing Managers Indices reflect a rebound in economically sensitive cyclical sectors, including energy and materials, favoring emerging market exporters of raw materials and manufactured products amid world-wide inventory re-stocking.

Massive global liquidity injections, highly accommodative interest rates around the world, a weakening U.S. dollar, accelerating global growth and clearly the development and deployment of vaccines all bode well for emerging market stocks in the year ahead.

On the currency front, since the 2008 Global Financial Crisis, the greenback mostly gained ground. Europe grappled with its sovereign debt crisis from 2010 to 2012, so the U.S. Federal Reserve didn’t hint at tightening monetary policy until 2013, sparking the “taper tantrum.” The Fed began shrinking its balance sheet a few years later and in late 2016 started slowly lifting its key rate, which peaked at 2.5% in 2019. But the rate now sits near zero, where the Fed says it shall remain at least through 2023. The U.S. Dollar index has fallen about 13% from its March 2020 high to below the key 90 threshold, significantly mitigating the risk of EM currency depreciation for dollar-based investors.

In response to the pandemic’s deflationary impact, central banks in developed and developing countries have slashed their key rates. While many also engaged in fiscal stimulus, the developed economies pursued far greater deficit spending. Indeed, combined monetary and fiscal stimulus in the U.S. alone amounts to more than $10 trillion, nearly 50% of GDP. Because emerging economies don’t benefit from reserve currency status, they can’t afford deep fiscal deficits. But that means most entered the pandemic with smaller fiscal deficits and lighter debt loads, so they also don’t have to shoulder the heavy debt burdens weighing on advanced economies.

No doubt the globally synchronized monetary policy easing and gusher of fiscal stimulus create a powerful backdrop for global growth. But emerging markets are expected to rebound faster. According to Bloomberg consensus estimates, after shrinking 0.8% in 2020, emerging markets are poised to expand 5.1% in 2021, with China, the world’s second-largest economy, climbing 8.2%. Developed economies are set to advance 3.2% in the year ahead, not quite recovering from the estimated 3.5% contraction in 2020.

Earnings growth should prove robust globally in 2021, thanks, as noted, to the expected recovery in demand, re-stocking and extremely easy comparisons against prior-year numbers across most sectors. But earnings growth should be especially strong in emerging markets as the weaker dollar allows underlying local currency earnings to shine through, and in many instances exceed index earnings in advanced economies.

Estimated 2021 Earnings Growth for Most EM Countries Exceeds International Benchmarks (based on forward Bloomberg estimated EPS as of 12/18/2020)

Source: Bloomberg

At the same time, structural reforms and productivity-enhancing investments that have been made in many emerging markets in recent years are material contributors to the recovery. India, for example, enacted a long-needed, sweeping goods and services tax reform; a crucial new Insolvency and Bankruptcy Code; a foreign direct investment liberalization; and a slew of financial inclusion initiatives. Brazil reformed its fiscally draining pension system and its deregulation drive reduced onerous business costs. China has reined in off-balance sheet, “shadow banking” and refrained from heavy debt-financed fixed investment “stimulus.”

Hundreds of millions of people in emerging markets will resume ascending into the middle class in 2021. Their ranks are estimated to grow 6% annually, if not more. Their demand for middle-class goods and services, from housing to white-line appliances to education and entertainment, has a far longer growth runway than that of mature, developed markets. Digitization means they can leap frog much costly infrastructure spending: wireless broadband over wireline, for example.

To be sure, sensible risk management, we believe, requires a fundamental, stock-by-stock approach that is diversified, stylistically balanced and disciplined. This provides downside protection whenever downturns or black swans appear. It then helps to compound off a higher base as recovery ensues and factor leadership shifts between growth and value, as it frequently does in emerging markets.

Discover more about:

Stay Connected

Subscribe now to stay up-to-date with Thornburg’s news and insights.
Subscribe

More Insights

Advising Clients

The Death of the 60/40 Portfolio? Think Again.

If investment print and internet article headlines give you anxiety, you've come to the right place. In this podcast, Jan shares ideas that may prevent your blood pressure from spiking the next time you read an alarming headline. Plus, the debut of the Ask Jan segment.
Global Equity

Navigating the Post-COVID Resurgence in Travel and Hospitality

As the storm that crushed the travel and lodging industries clears, we see post-Covid investment opportunities and pitfalls in the skies ahead.
Markets & Economy

Is the Fed Gambling with Markets & the Economy?

Jason Brady believes “We're not going to see anything near the Fed's 2% target inflation… forcing the Fed to continue to be very hawkish."

Our insights. Your inbox.

Sign up to receive timely market commentary and perspectives from our financial experts delivered to your inbox weekly.
This field is for validation purposes and should be left unchanged.
Feedback