Extremely bullish outlook for emerging markets: JPMorgan's Gabriela Santos

Emerging markets are set to rally in the coming years after a lengthy period of disappointing returns, according to JP Morgan Chase & Co.

Gabriela Santos, a global market strategist at the firm’s investment arm, said the asset class will benefit from a cyclical recovery in the global economy, buoyed by advances in Covid-19 vaccines. A return to more orthodox foreign policy under US President-elect Joe Biden as well as more accommodative central banks provide additional support.

“There are so many stars aligning for emerging markets,” Santos said on Bloomberg TV. “We’re extremely bullish on EM equities, EM debt and EM FX.”

She joins investors and analysts from BlackRock to Goldman Sachs Group and Renaissance Capital in flagging opportunities in emerging markets after the US election. The JPMorgan strategist said the positive backdrop will benefit a broad group of developing-nation assets, not only securities from North Asia and the technology sector, which have outperformed this year.

The Brazilian real, which has slumped the second-most in the developing world this year, has “plenty of room” to gain, according to Santos. She also said there’s value in China, given the economic rebound, a potential for improved trade relations and the increase in investor flows into the the nation’s assets.

“That’s a structural support for China’s yuan to be one of the currencies that appreciates the most over the next decade,” Santos said.