Speaker 0:
So E M equity certainly had a very tough 2022 but we believe 2023 beyond should be very strong for E M equities. One of the main reasons for that is emerging market monetary tightening cycle is nearing an end. So E M central banks were amongst the first to hike interest rates well ahead of the fed and the ECB inflation is peaking in emerging markets and in many countries, it's actually receding.

Speaker 0:
Secondly, the growth in emerging markets should be strong this year and next. So if you look at IMF projections, they are projecting that emerging markets should grow at three times the rate of developed markets. And China and India alone should grow at 5 to 6% and most likely will be responsible for more than half of global growth.

Speaker 0:
Finally, valuations are looking very attractive in emerging markets relative to the earnings growth. So we believe that earnings should grow mid teens this year and next, and they are trading at 10 to 11 times pe multiples which is very attractive relative to developed markets. So for these reasons, we like E M equities this year and next.

Speaker 0:
So we believe the Chinese economic growth should be strong this year, we believe that the economy should grow 5 to 6%. And a big reason for that is the reopening. Given the cancellation of the zero COVID policy by the Chinese government,

Speaker 0:
the Chinese policy makers have a single minded focus to revive the domestic economy. We are seeing strong policy support. The P BC has been reducing reserve requirements. The state owned banks have been supporting the real estate sector which has been under a lot of stress

Speaker 0:
and the regulatory tightening that we saw for the private enterprises, especially the tech sector has been receding. So there's a strong policy push to revive the domestic economy. Also the Chinese equity market valuations are looking quite attractive. So we believe that many Chinese companies should grow earnings 15 to 16% and many of these companies are trading at very low multiples 10 to 11 times

Speaker 0:
in a developed market context, as well as an E M context that's very attractive. So this is why we went overweight Chinese equities.

Speaker 1:
22 really saw a lot of valuation compression across the board, right? Growth was out of favor. You had various you know, macro challenges, lockdowns, geopolitical issues and so on and so forth. But we do think that's uncovered a lot of opportunity, let's say for China, for instance, the country is now emerging from a

Speaker 1:
really two or three year periodic episodic lockdown and obviously they're off their lows, but still, you know, they're way, way off their highs and valuations are still pretty attractive. So we certainly think there's a lot of opportunity to be exploited there other

Speaker 1:
that perhaps are looking a little bit more interesting, like in Brazil, for instance, also another very, very soft geography, all sorts of macro issues, political issues and so on and so forth. But some of the companies were keeping track of, I mean, the stock prices and the valuations are not too far from their pandemic lows,

Speaker 1:
you know, so, you know, more risk but definitely certain things to keep a track of. So the China internet space is kind of like a war of all against all. Also from a trajectory standpoint, it's very difficult for us to even have a two or three year view. Um As far as whether any companies end up in a better position from a competitive advantage or sustainability standpoint versus there today. So for that reason, we've been pretty cautious in the whole space. Um And I think that's going to remain. So

Speaker 1:
the yield right now is so attractive in the front to end. And we're getting really solid investment grade and quality high yield names there that we think that is a good place to position. And we don't have to be so focused on the timing of the move in the long end of the curve. When we think more regionally,

Speaker 1:
we've talked about China and Asia, we are biased to Asia. We like the growth prospects there, we like utilities, we like consumer, we like telecom. We see these all as you know, broadly benefiting from the, the, the reopening that we're seeing there that will be driven by China.

Speaker 1:
We have other pockets. Um Mexico, of course, everybody is looking for the F D I there, this near shoring and we've been watching that closely. So that's something we're feeling good about. And then there's some sectors that have um that we've seen in some countries where there's been maybe a hit devaluation that we're spending time on. And we like the consumer in Chile right now.

Speaker 1:
I think the third place that we're focusing on, that's somewhat surprising to some is that we really like green bonds. So when you look at this green, that is out there that people um get concerned about what you see now with the higher yields and spreads is that the green, green

Speaker 1:
isn't that noticeable. So you're not giving up much to be in a green bond. And we like the green bonds from, from the angle of the discipline they bring to these uh companies and that they bring to our investing in that in our low carbon approach.