Market Viewpoint

David Dali, Head of Portfolio Strategy, provides his 12-month outlook for global equity markets.

EM Recovery Pushed to Second Half, 2024. Stay Active, Patient and Selective

Emerging Markets should recover as monetary conditions ease toward the second half of the year. Accommodative policies typically coincide with a neutral to weaker U.S. dollar and a boost to cyclical stocks which are typically supportive of emerging markets. Consensus earnings growth is overly optimistic, in my view, but bigger profits later this year should also provide a lift to stock prices.



The economic and market forecasts presented herein have been generated by the author and provided for informational purposes only. Forecasts are based on proprietary models and there can be no assurance or guarantee that the forecasts can or will be achieved.

Emerging Markets

  • Emerging markets (EM) index returns have been weighed down by underwhelming earnings growth, the Fed’s “higher-for-longer” interest-rate policy and China’s weak sentiment. However, I expect all three of these headwinds to fade as we progress through 2024. I anticipate China will announce additional corrective actions to address its challenges, which underpins my conviction that Asian and EM equity allocations should recover from a weak start in 2024 leading to outperformance in coming quarters.
  • I’m also maintaining my neutral view on Latin American emerging markets given last year’s strong returns and the vulnerability of the region’s largest economies to a temporary slowdown in the global economy. Tight monetary conditions may dampen economic activity in the near term but should support the region’s currencies.
  • I’m positive on Asia ex Japan but cognizant that strong returns last year in Asia’s largest markets (ex-China) combined with elevated earnings expectations could serve as a short-term headwind until policy rates in the U.S. and Asia turn meaningfully lower. Consequently, I am downgrading my view to neutral. Lower rates in the second half could re-ignite interest in the cyclical and technology heavy indices of South Korea and Taiwan where valuations are stretched amid already heightened earnings expectations, in my view. 
  • Among single countries, I’ve trimmed my overweight on China to reflect the market’s overly ambitious earnings expectations for the first half of the year. However, we believe being underweight China at current valuations is an active risk not worth taking given policy-induced stimulus and government activism to support stock markets which should underpin consumer sentiment and mitigate further property-sector shocks. 
  • In India, economic growth remains robust and the government’s commitment to fiscal prudence in an election year makes the country the best long-term structural story within emerging markets. However, currently elevated valuations make index investments vulnerable, in my view, and requires active managers to be extremely selective, hence my continued neutral stance.

Developed Markets

  • Japan’s comeback story remains intact. It’s benefiting from a return to reflationary GDP growth and the government’s unrelenting activist pressure on undervalued companies to increase payout and buyback ratios. I’ve upgraded my view to a slight positive to reflect my belief that Japan’s corporate earnings may be more insulated than other international developed markets from the Fed’s tighter-for-longer monetary policy.
  • U.S. economic resilience and its tight labor market has delayed monetary easing toward mid-2024. Positive year-to-date equity performance reflects the market’s expectation that earnings growth will remain stable and in the high single digits. My neutral stance reflects raised valuations and the high concentration of market returns within relatively few mega cap names.
  • I’ve maintained my underweight on developed international investments, with the exception of Japan, due to tight monetary conditions and lower earnings growth consensus. Volatility in energy prices and the impact of the Ukraine and Middle East conflicts present further challenges. 


David Dali is Head of Portfolio Strategy at Matthews. David serves as a macro thought leader and as a proxy for portfolio managers, providing insights and analytics to clients. He has spent much of his career allocating and investing in equities, fixed income, currencies and derivatives.

Emerging Markets is based on the MSCI Emerging Markets Index, which captures large and mid cap representation across 24 Emerging Markets countries. Constituents include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

Emerging Markets Latin America is based on the MSCI Emerging Markets Latin America Index, which captures large and mid cap representation across five Emerging Markets countries in Latin America, including Brazil, Chile, Colombia, Mexico, and Peru. 

Asia ex Japan is based on the MSCI AC Asia ex Japan Index, which captures large and mid cap representation across two of three Developed Markets (DM) countries, excluding Japan, and eight Emerging Markets (EM) countries in Asia. DM countries include: Hong Kong and Singapore. EM countries include: China, India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand.

China is based on the MSCI China Index, which captures large and mid cap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). 

India is based on the MSCI India index, which is designed to measure the performance of the large and mid cap segments of the Indian market.

Japan is based on the MSCI Japan index, which is designed to measure the performance of the large and mid cap segments of the Japanese market.

U.S. is based on the MSCI USA index, which is designed to measure the performance of the large and mid cap segments of the U.S. market.

International is based on the MSCI World ex USA index, which captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries-- excluding the U.S. DM countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the U.K.



The views and information discussed in this report are as of the date of publication, are subject to change and may not reflect current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. Investment involves risk. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in small- and mid-size companies is more risky and volatile than investing in large companies as they may be more volatile and less liquid than larger companies. Past performance is no guarantee of future results. The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.