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Our hypothesis for a bull market in Emerging Markets equities

Our hypothesis for a bull market in Emerging Markets equities



We believe that the decade ahead will be particularly good for emerging market (EM) equities. While this may come across as contrarian, it essentially rests on a handful of considerations: 

Weakness in the dollar. The big structural moves in (non-China) EM equities are nearly always against the backdrop of weakness in the US dollar. And we see all the ingredients for significant US dollar weakness over the next few years, largely a reflection of considerable fiscal stress in the United States. We believe the federal debt stock will continue to expand at what can only be considered a highly unorthodox pace. The US federal debt is estimated to have surged from nearly $17 trillion in September 2019 to $20 trillion in June 2020.1 And the flow is even more dramatic. The US federal deficit crested $1 trillion in 2019 at peak cyclical employment levels.2 We expect the federal deficit to significantly worsen over the next 2-3 years, even after the pandemic subsides, as the highly contested November presidential elections lead the winning administration to address longstanding grievances associated with socioeconomic inequalities.

Figure 1: Emerging market equities and the US dollar have been negatively correlated

Performance of the US dollar vs. returns of emerging market equities over the past decade

Source: Bloomberg, L.P. as of 8/7/20

The right cocktail. An environment where interest rates and energy prices are low, along with a pronounced trend against the US dollar, will likely create a situation where foreign capital flows and private investments will be directed towards non-US assets. That bodes well for emerging markets, which we think offer greater potential for growth as (non-China) developing countries by and large are constrained by insufficient domestic savings to fund investments necessary to lift structural growth. This starts the flywheel witnessed in previous periods of significant EM outperformance — foreign capital inflows beget credit creation, which in turn begets capital formation, growth, (formal sector) employment, productivity and significant earnings momentum. We see much of Latin America, Southeast Asia and parts of sub-Saharan Africa benefiting from this potential cocktail of a weak U.S. dollar, low global rates, sustainably lower energy prices and retreat from US dollar assets.

China. And then there is the other factor — the potential for a structural bull market in China. We have written previously about the outsized influence of China (45% of EM GDP, 41% of EM market capitalization3) and the fact that China’s economy could eventually dwarf all the other EM equities combined. This has already started to happen. China now accounts for more than 40% of the MSCI EM index, and we think it will continue to grow with the outstanding pipeline of Chinese unicorns going public in Hong Kong (and now also in the A-share markets). We believe China is the only significant macro growth story in a very dismal climate for worldwide growth. Having generated a plurality of worldwide growth over the past 10 years, China, we believe, will account for more than 50% of total worldwide growth over the next 2-3 years, in our view (and significantly all of global growth in 2020!). China’s GDP is rapidly closing the gap with the US, and it is now larger than the GDP of Africa, India, Russia, and all of Latin America combined. For the decade ahead, we expect China will remain the engine of global growth and only accelerate in terms of its increasing contribution to worldwide GDP despite likely lower, but higher-quality growth.

We also anticipate that the China-US relationship will remain structurally challenged while likely causing high-quality Chinese companies to consider mainland China and Hong Kong as their preferred exchanges for company listings. This is an important turn with wide-ranging consequences that we think will lead to improved quality of companies listed on the exchanges, better investment opportunities for domestic investors and will result in yet another flywheel effect that will boost the performance of Chinese equities. We expect this effect to be very significant as China has among the highest household savings globally, estimated at 23% of the country’s GDP (based on International Monetary Fund data as of 2018) and 15% higher than global average. In the past, public savings were invested in real assets like infrastructure while private saving went into real estate. Indeed, China’s enormous wealth creation is anomalous in its lack of diversity. This historically has been a result of the dysfunctional domestic equity market, populated almost entirely with state-owned companies. The highest quality Chinese equities were inaccessible to domestic investors, having been listed predominately overseas (US American Depository Receipts [ADRs] and more recently in Hong Kong). 

Accessibility to these companies is changing rapidly. First, the Hong Kong Connect platform has opened a (south-bound) channel for domestic investors to invest in mainland companies listed in HK. Many of China’s finest companies have chosen to list in Hong Kong after changes to listing requirements, which permit dual-class shares (a staple of the ‘new economy’ governance globally). Meituan Dianping, Innovent Biologics, Wuxi Biologics among others have paved the way for even larger primary listings, including the rumored forthcoming $200 billion IPO of the Ant Group (the fintech arm of Alibaba).4 Second, growing US political pressure on Chinese ADR listings is encouraging a wave of parallel listings of companies like Alibaba and in Hong Kong, all of which become accessible for the first time to mainland investors through the HK Connect mechanism. Finally, the mainland exchanges are also evolving. In 2019, Shanghai’s tech-focused STAR Market (Shanghai Stock Exchange Science and Technology Innovation Board) was launched, modeled on New York’s Nasdaq. Meanwhile, the composition of the historic Shanghai and Shenzhen bourses has changed to reflect higher quality private sector listings, including such behemoths as Jiangsu Hengrui and Ping An Insurance. With these massive changes in accessibility (and relatively pedestrian real estate prices), we anticipate a tidal wave shift in asset allocation towards equities, analogous to what we witnessed in the United States in the 1980-90s when mutual funds democratized equity investing. And remember China has the largest savings pool in the world.

An observation. Markets have become enormously concentrated over the past 12 months. This is an anomaly we worry about. While much is bantered around the phenomenal rise of US tech giants’ capitalization and high valuations in pockets of emerging new tech companies, we see parallels in the EM landscape. There is a clutch of companies, which have heralded enormous attention and large amounts of investment dollars that we believe are structurally overvalued. These are often labeled with analogues (MercadoLibre, “the Amazon of Latin America”; Sea Group, “the Tencent of Southeast Asia”). While we are envious at having missed these early on, we would caution that lofty valuations and an uncertain path to profitably may result in losses as the long-term gravitational pull of fundamentals develops.  Avoiding these, and other potential landmines requires an active manager that is focused on identifying high quality companies with strong competitive positions, balance sheets, cash flows and other factors that will allow them to thrive in the post-COVID-19 world.

We believe the challenging US and global circumstance make a very strong case for EM equities that offer a large investment opportunity set and several extraordinary companies with many real options that will manifest over time. The EM flywheel effect along with the positive developments around Chinese equities certainly bode well for the EM equity asset class, which we believe will be among the most attractive investment opportunities over the next decade. 

As of June 30, 2020, Invesco Oppenheimer Developing Markets Fund had assets in the following companies: Meituan Dianping (1.01%), Innovent Biologics (0.85%), Wuxi Biologics (0.33%), Alibaba (5.09%), (0.00%), Jiangsu Hengrui (2.31%), MercadoLibre (0.00%), Amazon (0.00%), Tencent (7.81%), Sea Group (0.00%) and Ping An Insurance (2.94%).

As of June 30, 2020 Invesco Oppenheimer Emerging Markets Innovators Fund had assets in the following companies: Meituan Dianping (0.00%), Innovent Biologics (1.90%), Wuxi Biologics (1.30%), Alibaba (5.09%), (0.00%), Jiangsu Hengrui (2.31%), MercadoLibre (0.00%), Amazon (0.00%), Tencent (0.00%), Sea Group (0.00%) and Ping An Insurance (0.00%).

1  Source: Brookings “Policy 2020: How worried should you be about the federal deficit and debt?” 7/8/20.

2  Source: Brookings “Policy 2020: How worried should you be about the federal deficit and debt?” 7/8/20

3  Source: World Bank data, as of 7/31/20.

4  Source: Reuters, “Exclusive: Alibaba’s Ant plans Hong Kong IPO, targets valuation over $200 billion, sources say,” 7/8/20.

Important Information:

Image Credit: Song Heming/ Stocksy

Foreign investments may be volatile and involve additional expenses and special risks, including currency fluctuations, foreign taxes, regulatory and geopolitical risks. Investments in securities of growth companies may be volatile. Emerging and developing market investments may be especially volatile. Eurozone investments may be subject to volatility and liquidity issues. Investing significantly in a particular region, industry, sector or issuer may increase volatility and risk.

The opinions expressed are those of the author as of August 13, 2020, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax professional for information concerning their individual situation. The opinions expressed are those of the authors, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

Holdings are subject to change and are for illustrative purposes only and should not be construed as buy/sell recommendations.

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.



They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…



There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.


The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.


There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.


“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”


In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.


There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.


Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.


Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”


As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.




About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit



Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 |

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…



US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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