Investors more upbeat on emerging markets, Latam lags in HSBC survey

FILE PHOTO: Women wearing protective masks walk past HSBC headquarters, amid the coronavirus disease (COVID-19) outbreak in Kuala Lumpur, Malaysia September 9, 2020. REUTERS/Lim Huey Teng

LONDON (Reuters) - Investors have turned more upbeat about the outlook for emerging markets, an HSBC survey on Thursday showed, although regional differences have sharpened with money managers less positive than three months ago about Latin America.

Some 46% of investors are bullish on developing nations, compared with less than a quarter in June, and more than two-thirds are expecting growth to accelerate over the coming 12 months, the report said.

“Asia appears to be leading the improvement in sentiment and still stands out as the region with the most favourable outlook across all asset classes, while Latam has the least favourable outlook,” HSBC researchers wrote in the quarterly report.

The survey gathered data from 195 institutions with $650 billion of emerging market assets under management during a period between Aug. 11 and Sep. 15.

“There was a deterioration in the growth expectations for both Latam and Middle East, the two regions that are highly exposed to commodity prices,” HSBC said.

Inflation expectations also crept up, with 50% of those surveyed now predicting rising price pressures in the year ahead compared to 37% in June.

Fund managers felt more “sanguine” about developing market currencies, HSBC said, with 38% expecting them to stay broadly stable. In fixed income markets, the survey showed a shift from hard currency bonds to local markets since June.

In equities, two thirds expected developing market stocks to rise, with 55% expecting them to outperform developed peers.

MSCI's emerging market equity benchmark .MSCIEF has fallen by more than 5% since the start of the year, while the developed market index .MIWO00000PUS is down 2.8%.

Reporting by Karin Strohecker; Editing by Alexander Smith