Core Viewpoint - Recent global risk appetite has increased, with significant net inflows into large-cap equity funds in the US and globally, while small-cap equity funds continue to experience net outflows [1] Group 1: Fund Flows - Large-cap growth equity funds in the US have seen substantial net inflows [1] - Global large-cap equity funds have also attracted considerable net inflows [1] - US fixed income funds recorded the highest net inflows, although the monthly inflow scale has decreased [1] Group 2: Market Trends - There is a notable trend of increased allocation to global risk assets [1] - Investment interest in emerging markets continues to rise [1] - Preference for large-cap stocks remains dominant in the current market environment [1] Group 3: Specific Fund Performance - QDII ETFs related to the Hang Seng Technology sector have received significant capital inflows [1] - The Hang Seng Index has experienced slight capital outflows [1]

Group 1 - The core viewpoint is that while there are concerns about the absolute growth of AI companies, their stock price increases are supported by EPS growth, making valuation increases reasonable [1][2] - AI companies are expected to have stable profit models and broad market space, which may allow them to enjoy higher valuations [1] - The focus of investment may shift from a few standout companies to a more diversified opportunity landscape, with a balanced approach to AI stocks and other sectors [1][2] Group 2 - The penetration of AI in businesses is expected to be gradual, requiring time for companies to integrate AI into their operations [2] - If AI fails to translate into commercial value, it could negatively impact the market, leading to a cautious optimism regarding AI's long-term trend [2] - The growth style is expected to remain strong in 2025, but excess returns have started to narrow compared to other styles, indicating a potential shift towards a more balanced market style in 2026 [2][3] Group 3 - Global economic growth is anticipated to continue in 2026, supported by AI-related investments, a loose monetary policy environment, and reduced tariff uncertainties [3][4] - Emerging markets are expected to outperform developed markets, driven by capital market reforms and the concentration of AI industry chains [5][6] - The trend of diversifying asset allocation away from a heavy reliance on US assets towards a more varied approach is expected to strengthen over the next three to five years [6] Group 4 - In the Chinese market, the focus is on the transformation of the economy, with rising consumption contributing to GDP and creating investment opportunities in new consumption sectors [6][7] - The real estate sector is no longer the preferred investment choice, with high-value exports expected to drive corporate profitability [7] - The role of private enterprises in China's economy is anticipated to grow, supported by government policies aimed at enhancing their vitality [7][8] Group 5 - A balanced investment strategy is recommended to reduce portfolio volatility, including long-term assets and healthy revenue-generating companies, particularly in AI, innovative pharmaceuticals, and stable consumer sectors [8] - Improvements in corporate governance and increased returns to investors are expected to attract foreign capital into the market [8] - The trend of increasing dividend payout ratios in A-shares is seen as a positive factor for attracting foreign investment [8]

Core Viewpoint - The Turkish stock market is expected to achieve its best January performance in 29 years, driven by optimism surrounding emerging markets and attractive valuations attracting foreign investors [1] Group 1: Market Performance - The Istanbul Stock Exchange 100 Index has risen 19% in January, marking its best performance in USD terms since 1997 [1] - Despite the recent surge, Turkish stocks still exhibit significant valuation discounts compared to other emerging market equities based on expected price-to-earnings ratios [1] Group 2: Foreign Investment - From early December to January 16, the Turkish stock market attracted $1.36 billion in foreign capital inflows [1] - BlackRock's Frontier Markets Investment Trust has included Turkish stocks as one of its largest holdings, increasing its allocation from nearly zero a year ago to nearly 10% [1]

Core Viewpoint - Foreign capital is flowing back into the Thai stock market due to improved global risk appetite, although potential downward pressures remain from trade retaliation measures and geopolitical risks [1] Group 1: Market Dynamics - Analysts note that geopolitical tensions have eased, leading to a rise in global risk appetite and domestic economic growth factors, which have benefited the Thai stock market [1] - The easing of tensions between the US and Europe over Greenland's sovereignty has helped restore risk appetite in the market, increasing demand for risk assets in emerging markets [1] Group 2: Investment Trends - A key driver for the renewed interest in the Thai stock market is the upcoming rebalancing of the MSCI index, which may see a decrease in Indonesia's weight, potentially leading to a capital outflow of approximately $2 billion from Indonesia's stock market [1] - Some of the capital that flows out of Indonesia is expected to be redirected to other emerging markets, including Thailand [1] - According to Setsmart data, foreign investors net purchased Thai stocks worth 5.5 billion THB from January 3 to January 21 [1]

Core Viewpoint - The report by ICBC Standard Bank highlights a pivotal shift in global asset allocation towards emerging markets and commodities by 2026, with a particular emphasis on the investment value of emerging markets and the potential for strong performance in precious metals and copper prices due to their critical roles in energy transition and AI technology advancement [1]. Emerging Markets - By 2026, investors are expected to increasingly recognize the relative investment value of emerging markets, particularly in Africa and Central Asia [2]. - The issuance of local currency-denominated bonds in emerging and frontier markets is projected to rise, driven by capital inflows seeking returns, with some frontier markets likely to see improvements in macroeconomic fundamentals leading to upgrades in sovereign credit ratings [2]. - Specific opportunities include: - Egypt, supported by strong external financing and government reforms, is expected to see a decline in inflation and improvements in fiscal indicators, creating a favorable investment environment [2]. - Nigeria benefits from foreign exchange liberalization, oil sector restructuring, and fiscal reforms, with strong foreign reserves and declining inflation contributing to positive asset performance [2]. - Uzbekistan's market liberalization, undervalued currency, and rising gold exports are expected to enhance foreign exchange reserves and asset return potential [2]. - Ghana is anticipated to resume international bond issuance by 2026, providing market access opportunities for international investors [2]. Commodities - The report indicates that the commodity market will reflect supply and demand changes more rapidly amid increasing uncertainty in the global economic and financial landscape, with a structural differentiation expected in 2026 [3]. - In precious metals: - Gold prices surged in 2025 due to central bank purchases, aggressive U.S. trade policies, and geopolitical disturbances, but may face temporary downward pressure in 2026 as the Federal Reserve slows its easing, trade tensions ease, and market risk appetite improves, although institutional buying interest remains strong [3]. - Platinum's price sustainability is questioned due to structural weaknesses in automotive demand and jewelry consumption, leading to accumulating downward pressure [3]. - For base metals: - Copper is positioned as a strategic metal benefiting from green energy transitions and AI infrastructure investments, with ongoing supply shortages exacerbated by production disruptions, leading to high volatility in copper prices [3]. - In the oil market: - Oil prices are expected to remain stable in 2026 after experiencing fluctuations in 2025 due to OPEC+ production increases and geopolitical factors, with record supply surpluses initially pressuring prices, but a gradual recovery in global demand and declining shale oil production may stabilize the market [3].

Core Viewpoint - Emerging markets (EMs) have underperformed compared to U.S. stocks over the past decade, but recent trends suggest a potential turnaround with significant future returns expected for EMs [1][6][16] Performance Comparison - The S&P 500 has increased by 83% over the past 5 years, while the Vanguard Emerging Markets ETF (VWO) has only risen by 6.8%, indicating a stark contrast in performance [1] - Historically, from 1990 to around 2013, EMs and the S&P 500 produced similar returns, but since then, U.S. stocks have significantly outperformed EMs due to factors like a strong dollar and quantitative easing [3][5] Future Outlook - Analysts at Goldman Sachs project that U.S. stocks will return an average of 6.5% over the next decade, while emerging markets are expected to return 10.9%, suggesting a strong potential for EMs to catch up [7] - The recent performance of the Vanguard EM ETF, which is up 40% in the past year, indicates a possible beginning of a longer-term trend of EM outperformance [6] Investment Opportunities - The average P/E ratio for the Vanguard EM ETF is 16, which is about half that of the S&P 500, making EMs relatively cheap [8] - The dividend yield on VWO is 2.67%, significantly higher than the S&P 500's 1% yield, presenting an attractive income opportunity for investors [8] Specific Investment Recommendations - For broad exposure to EMs, the Vanguard EM ETF (VWO) is recommended, although it is heavily weighted towards China [9] - The Cambria Emerging Shareholder Yield ETF (EYLD) is suggested for those seeking high-yield EM stocks, focusing on dividend and buyback yields [11] - Brazilian stocks are highlighted as particularly attractive due to low valuations and high dividend yields, with the iShares Brazil ETF (EWZ) trading at a P/E ratio of 11 and a trailing dividend yield over 5% [12][15] Sector Insights - Brazil is noted as a natural resource powerhouse, with potential for strong returns if commodity prices rise, making it a strategic focus for investment [13] - Individual stocks such as Petrobras, Vale, and Nubank are mentioned as favorable investments within the Brazilian market, with varying performance since coverage began [14]

Core Viewpoint - Pimco indicates that the recent upward trend in emerging markets is just the beginning of a longer-term trend, with intentions to maintain investment positions in this area [1] Group 1: Market Trends - The head of Pimco's emerging markets investment team, Pramol Dhawan, believes that the trend of emerging markets will continue for years due to changes in global market fundamentals [1] - Concerns over fiscal stability in developed economies are rising, while developing countries are demonstrating stronger fiscal discipline, challenging long-held perceptions among global investors [1] Group 2: Currency and Investment Dynamics - The U.S. dollar has shown weakness recently, influenced by market doubts regarding the independence of the Federal Reserve, which indirectly enhances returns on emerging market investments [1] - Dhawan does not adopt a fully bearish view on the dollar but prefers to allocate investments to markets with strict fiscal discipline and prudent measures to curb inflation [1] Group 3: Investment Inflows - Emerging market assets have become increasingly attractive, with U.S.-listed emerging market ETFs attracting $3.97 billion in inflows for the week ending January 9, marking the highest weekly inflow in over a year and a significant increase from the previous week [1] - The Chinese market has been a major contributor to this inflow, with weekly inflows growing more than fourfold compared to the previous week [1]

Core Viewpoint - Pimco believes that the recent surge in emerging markets is just the beginning of a more enduring trend, with no intention to withdraw investments [1][6] Group 1: Performance and Strategy - A fund managed by Pimco, heavily invested in local currency government bonds of developing countries, achieved a 22% return over the past year, outperforming nearly 90% of its peers [1][6] - The assets under management for this fund have risen to approximately $6.4 billion, the highest level since 2013 [1][6] - Emerging market assets are expected to perform well in 2025, particularly in local markets, with an emerging market stock index rising over 30%, nearly double the S&P 500 index's increase [3][8] Group 2: Market Dynamics and Investor Sentiment - A Bloomberg index measuring local currency bonds returned 17%, benefiting from a weaker dollar and renewed capital inflows [3][8] - Concerns about fiscal discipline in developed economies are increasing, while developing countries are showing stronger fiscal discipline, challenging long-held beliefs among global investors [3][8] - The dollar experienced its worst performance since 2017, which has helped boost returns for emerging market investors [3][8] Group 3: Investment Preferences - Pimco prefers local currency bonds over hard currency bonds in its investment portfolio, with a ratio of approximately 2:1 [5][10] - Key investment bets include countries like Peru, South Africa, Brazil, Turkey, as well as frontier markets such as Egypt and Nigeria [6][10] - Many emerging market central banks have established credibility, with attractive real yields and potential for currency appreciation, indicating a more sustainable investment theme compared to the early 2000s [6][10]

Core Insights - PriceSmart's stock price has reached new all-time highs in early 2025, indicating a potential upside of $45 as it broke out of a previous trading range and established new support levels [2][3] - The company's fiscal Q1 results for 2026 showed strong revenue growth of nearly 10%, driven by new store openings and comparable store sales, with net revenue of $1.38 billion exceeding analyst expectations by 140 basis points [5][6] - PriceSmart is positioned as a leader in emerging markets, benefiting from GDP growth in these regions, particularly in Latin America, which is expected to grow over 100 basis points faster than the global average [4] Financial Performance - The fiscal Q1 results indicated a 10.6% increase in net merchandise sales (9.5% on an FX-neutral basis) and an 8% increase in comparable sales, reflecting strong operational performance [5] - The company reported GAAP earnings of $1.29, beating consensus estimates by 1 cent, despite increased investment activities impacting earnings [6] Growth Strategy - PriceSmart plans to build four new stores, which are already under construction, and expand into key Caribbean markets such as Costa Rica, Jamaica, and the Dominican Republic [6] - The stock is considered to present value relative to peers and has shown faster growth over a comparable period, reinforcing its competitive position in the market [4]

Group 1: Economic Trends in Asia - The growth dynamics in Asian emerging markets are shifting, with geopolitical and tariff-related risks becoming major drivers for the bond market, impacting economic fundamentals and development prospects [1] - Despite strong economic growth in the region, it is partially attributed to exporters' "advance shipments," and external growth momentum is expected to weaken in 2026 due to soft global demand and high base effects [1] - Different Asian economies are adopting varied strategies to cope with reduced external demand, such as Indonesia and Thailand increasing subsidies for low-income households, India implementing new GST reforms, and China focusing on industrial transformation [1] Group 2: Inflation and Monetary Policy - Inflation levels in Asia are continuing to decline, exceeding market expectations, which provides greater room for monetary policy easing by central banks [1] - Unlike many other regions, Asian emerging markets have not experienced significant post-pandemic inflation spikes, allowing for a generally accommodative monetary policy stance across the region [1] Group 3: Bond Market Insights - In the hard currency sovereign and quasi-sovereign bond market, countries with relatively less fiscal stimulus maintain robust fundamentals, but further upside may be limited due to narrowed spreads [2] - Local currency bond markets favor economies with prudent fiscal policies, with expectations of continued monetary easing and significant downward potential for government bond yields [2] - The performance of local currency bonds is also influenced by exchange rate trends, with the Indian government’s focus on growth without excessive public spending making it particularly attractive [3] Group 4: Investment Grade Credit Resilience - Since 2025, Asian investment-grade bonds have shown solid returns despite global uncertainties, supported by stable macroeconomic fundamentals and limited new debt issuance [4] - The outlook for 2026 suggests that interest rate trends will remain a key driver for total returns in Asian investment-grade bonds, with a focus on the U.S. economic growth outlook [4][5] - The current spread levels indicate limited additional returns for taking on excessive credit risk, with the yield spread between BBB and A-rated bonds at approximately 33 basis points, reflecting high valuations [5] Group 5: Market Dynamics and Strategies - The technical factors in the Asian market remain favorable, with a projected $168 billion in investment-grade bonds maturing in 2026, leading to a low new issuance environment [6] - A defensive allocation strategy is recommended due to high current valuations, focusing on yield spreads and diversifying credit exposure to enhance portfolio stability [6] - Active management of country and sector allocations is essential to navigate external shocks and seize investment opportunities effectively [6]