Three overlooked opportunities from China's reopening

This article first appeared in Livewire markets on 28 March 2023

Stubbornly high inflation and rapidly rising interest rates will likely be the driving force behind whether the world goes into a US-led recession. Traditionally, emerging market assets have been hit harder in a recession that starts in developed markets for the simple reason that a high US Dollar makes servicing emerging market debt more expensive. 

But this time may be different, according to Amit Goel of Fidelity International, because living with inflation has become a way of life for many developing economies.

"Emerging markets have always lived in a relatively high inflation environment and a high interest rate environment. But this time, they are relatively better off."

The exception to this rule (as of writing) is China where three years of lockdowns significantly limited consumer spending and activity. And although China reopened in December, Goel believes you can still find specific opportunities three months after the fact. 

In this edition of Expert Insights, Goel reveals those three ideas (one stock and two sectors) while making the case for why Australian investors need to have exposure to emerging markets now.