BlackRock Investment Institute Videos

Market take

Weekly video_20250908

Axel Christensen

BlackRock Chief Investment Strategist for Latin America

Opening frame: What’s driving markets? Market take

Camera frame

Emerging markets have had a stellar year so far. The return from global emerging debt is double that of U.S. Treasuries. And emerging market equities are up 20% versus the 14% for developed markets, according to MSCI indices. We identify three key drivers creating opportunities – yet see considerable dispersion across countries that demands a granular approach.

Title slide: Three drivers for emerging markets

1: A weaker U.S. dollar driving returns

First: Many emerging market currencies are up against a dollar that has fallen around 10% this year against major currencies. A weaker U.S. dollar is typically associated with stronger relative EM performance. It also means that, for dollar-based investors, any gains on emerging market assets get amplified as they’re converted back to U.S. dollars.

2: Improved macro backdrop

Second: An improved macro backdrop is driving outperformance in many emerging markets. We see structural changes in several countries that bode well for durable growth.

Plus, inflation has fallen back down to pre-pandemic levels in some emerging markets, and rate cuts are well underway. Impending rate cuts from the Federal Reserve will likely spur more countries to do likewise, since following the Fed reduces the risk of local currency depreciation. That’s why we think now is a good time to lock in today’s higher yields on emerging market debt.

3. Mega forces driving dispersion

Each country has a unique combination of mega forces that drive returns in different places. That’s why we seek out bright spots, while staying neutral broad emerging equities on a short-term horizon.

Outro: Here’s our Market take

A weaker U.S. dollar, an improved macro backdrop and dispersion from mega forces are driving performance in emerging markets. We seek bright spots in equities and prefer local-currency over hard-currency emerging market debt.

Closing frame: Read details: blackrock.com/weekly-commentary

BlackRock Bottom Line: 2024 Global outlook

Speaker: Wei Li, Global Chief Investment Strategist, BlackRock Investment Institute

Script:

Higher interest rates and greater volatility define the new regime we’re in. In turn, that’s creating greater dispersion of returns.

We think investors will benefit from taking a more active approach to portfolios as we head into next year. 

Here’s our three investment themes for 2024: number one, managing macro risk; number two, steering portfolio outcomes; and number three, harnessing mega forces.

BlackRock Bottom Line open

Title: BlackRock Investment Institute 2024 global outlook

Our first theme is managing macro risk. Production constraints mean central banks face tougher trade-offs between inflation and growth – they can’t respond to faltering growth like before. This leads to a wider set of outcomes and a more uncertain macro outlook.

We don’t think investors should wait for the macro environment to improve. Instead, they should look to neutralize macro exposures or be very deliberate about which risks they take.

Our second theme is steering portfolio outcomes. We believe the new regime rewards an active approach to portfolios. Greater volatility and dispersion of returns create space for investment expertise to shine – that involves being more dynamic with indexing and alpha-seeking strategies, while staying selective.

Our third theme is harnessing mega forces. We see five structural shifts reshaping markets and driving returns now and in the future. We think they have become important portfolio building blocks on their own.

The bottom line is: Going into 2024 in the new regime, we want to put money to work. We believe investors should take a more active approach to their portfolios and be deliberate in taking portfolio risk.