When investors talk about environmental, social and governance (ESG), they often focus on a company’s environmental and social records. However, to overlook governance is to risk missing the point entirely.
In broad terms China is a perennial, but what’s captured the attention of many investors in recent times has been the announcement by MSCI to continue to increase the weighting of the China A Share market in 2019 in the MSCI Emerging Markets Index.
Tariffs themselves aren’t the most important factor in the trade dispute between the US and China. Instead, investors in emerging markets should watch for secondary effects that the tariffs might have on China’s balance of payments position, which could in turn put pressure on the currency.
Although we see volatility continuing, we expect a positive return for emerging market equities next year, with potentially greater dispersion of returns across regions than we have seen in the last 3-5 years.