Emerging Markets Research
Emerging Markets Strategy
J.P. Morgan Securities Inc., New York
November 30, 2009
www.morganmarkets.com
The certifying analyst(s) is indicated by the notation “AC.” See last page of the report for analyst
certification and important legal and regulatory disclosures.
Emerging Markets Outlook and Strategy for 2010
Joyce ChangAC
(1-212) 834-4203
joyce.chang@jpmorgan.com
J.P. Morgan Securities Inc., New York
EMBI Global, GBI-EM, JPMHY, S&P 500
Return index, Nov 28, 2008 = 100
70
80
90
100
110
120
130
140
150
160
170
Nov 08
Feb 09
May 09
Aug 09
Nov 09
EMBIG
S&P
US HY
GBI-EM Global Div.
(USD unhedged)
Source: J.P. Morgan
Spreads and yields—actual and forecast
Year
Forecast
Current
ago
End-Dec 2010
EMBIG
324
745
250
GBI-EM Global Div
7.10
8.50
7.90
CEMBI Broad
401
993
325
Fed funds
0.125
1.00
0.125
10-year bond
3.28
3.09
4.50
Source: J.P. Morgan
J.P. Morgan Securities Inc., New York
Joyce ChangAC (1-212) 834-4203
joyce.chang@jpmorgan.com
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Emerging Markets Research
Emerging Markets Outlook and Strategy for 2010
November 30, 2009
Table of Contents
2010 Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Emerging Markets pass a major stress test in 2009 . . . . . . . . . . . . . . . . . . . . . . . 5
EM valuations more compelling than US High Grade markets . . . . . . . . . . . . . . . . . 5
EM technicals remain positive with modest sovereign financing needs . . . . . . . . . . . . 6
EM Corporates likely to outperform EM sovereigns and US investment grade. . . . . . . . . 7
Shift the focus to local markets: GBI-EM return to reach almost 12% in 2010 . . . . . . . . . 9
Ten investment themes and risks to monitor in 2010 . . . . . . . . . . . . . . . . . . . . . . 11
EM Regional and Market Views for 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
• Emerging Asia: Growth to return to tren