JPMorgan Chase and other fund managers are swarming into emerging markets as volatility clouds global financial assets amidst the escalating Israel-Iran conflict, according to a recent Bank of America survey.
Emerging markets were hit rather significantly in April after the Trump administration announced unprecedented tariffs on the bloc.
However, with the 90-day pause on tariffs now coming to an end on July 8th – asset managers are increasingly convinced that final tariffs will land nowhere near as high as initially proposed, which may boost confidence in emerging markets.
“Only 1% expect it above 30%. Altogether, the weighted average US tariff rate is expected at about 13%,” the survey revealed.
According to BofA experts, a particularly exciting opportunity within emerging markets given the aforementioned backdrop may be in Uzbekistan.
What JPMorgan said about investing in Uzbekistan?
BofA strategists are bullish on Uzbekistan’s external debt since the country stands to “benefit from high gold prices” that they believe could push further to the upside amidst an uncertain geopolitical environment.
In their latest note to clients, the bank’s strategists argued credit rating agencies will soon upgrade their views on Uzbekistan’s sovereign debt held by foreign investors.
Their peers from JPMorgan have recently recommended building exposure to the Central Asian nation as well.
Amidst the current macroeconomic backdrop, it’s reasonable to invest in Uzbekistan over Dubai’s real estate bonds given it’s “geopolitically stable” and offers “similar or higher yields,” JPMorgan noted.
Note that Uzbekistan has been growing its gross domestic product (GDP) annually by an average 5.3% since 2017, as per data from the World Bank.
That said, it still isn’t the only opportunity within emerging markets for investors in 2025.
Other emerging markets have ample opportunities too
Greg Luken – a market veteran who founded Luken Wealth Management in early 1990s sees plenty of opportunity in India, Brazil and China for those interested in gaining exposure to the emerging markets.
Luken recommends investing in these Asian economies since they offer “favourable demographics and huge discounts relative to US markets.”
Moving forward, emerging markets will refuse to be the “redheaded stepchild” that receives up to 4.0% asset allocation only as global investors diversify away from the US amidst escalating macro and geopolitical risks, he argued in a recent interview.
Others including Deutsche Bank experts Mallika Sachdeva and Peter Sidorov are currently bullish on emerging markets as well. “Time for the Global South is now,” – they said in a note earlier this month, explaining that bloc comprises 130 countries including India, Pakistan, and Bangladesh.
The investment bank cited several tailwinds for “Global South” in its latest research note, including shifting demographics. According to Deutsche Bank, the region will home at least 70% of the global workforce by the end of the next decade.
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