Global Asset Managers Show Bullish Stance on Emerging Markets, Citi Reports
According to a comprehensive review by Citigroup Inc., the world's leading money managers have significantly increased their bullish positions across emerging-market assets. These influential funds, which collectively oversee more than US$20 trillion in assets, are demonstrating growing confidence in emerging-market equities, currencies, domestic bonds, and credit instruments.
Expanding Investment Across Multiple Regions
Citigroup's analysis of published outlooks from major global asset managers revealed that funds have been actively adding to long positions in markets spanning Asia, Latin America, Europe, the Middle East, and Africa. This strategic shift comes as MSCI's primary emerging equity index trades near record highs, having gained approximately 15% year-to-date with a modest 0.1% increase on Thursday.
The remarkable performance has been particularly driven by technology-heavy exchanges in Seoul and Taipei, where companies producing hardware for artificial intelligence networks have shown exceptional resilience. South Korean stocks surged an additional 3.8% on Thursday, with Samsung Electronics Co Ltd. climbing nine percent to achieve its longest winning streak since 1986.
Asian Tech Resilience Amid Global Uncertainty
Asian technology shares have demonstrated remarkable stability despite recent concerns about artificial intelligence's potential economic disruption that swept through Wall Street earlier in the week. The South Korean bourse, which recently surpassed France to become the world's ninth largest by market capitalization, has contributed significantly to the emerging stock index's six percent gain this month alone.
Meanwhile, the S&P 500 appears poised to end February with minimal movement, as U.S. stocks traded lower on Thursday despite Nvidia Corp.'s solid forecast failing to reassure investors about artificial intelligence prospects.
Drivers Behind the Emerging Market Shift
The overarching bullish sentiment toward emerging markets stems from several interconnected factors. Increased policy uncertainty in the United States combined with a substantial fiscal deficit has placed downward pressure on the dollar, prompting more investors to seek diversification away from the greenback.
"Developing nations are seeing increased interest as managers search for diversification in non-U.S. assets and see opportunities in EM due to improved fundamentals and a weak USD," Citi analysts explained in their client communications.
Additional concerns are mounting regarding spending increases in developed nations including Japan and Germany, further enhancing the relative appeal of emerging market opportunities.
Currency Market Developments
Emerging-market currencies experienced a mixed trading session on Thursday as the dollar rose approximately 0.1%. While some Asian currencies posted gains—led by Taiwan's dollar benefiting from strong foreign investment flows—broader sentiment toward developing-world foreign exchange turned cautious during the session.
Latin American currencies generally declined, with the Colombian peso among the worst performers after falling 1.9%. This movement followed a new poll showing leftist Senator Iván Cepeda holding a substantial lead in the presidential race and Ecuador's decision to raise tariffs on imports, escalating regional trade tensions.
"March 8 elections are right around the corner and local yields are spiking," noted Alvaro Vivanco, EM Macro Strategist at Wells Fargo. While the polling trend isn't entirely new, he added that approval ratings for incumbent President Gustavo Petro have seen a "big jump" recently, providing a "higher ceiling" for Cepeda at the ballot box.
Colombia's dollar bonds also declined across the curve, reflecting the broader cautious sentiment in specific emerging market segments despite the overall positive trend identified in Citigroup's comprehensive analysis.
