Market Viewpoint

David Dali, Head of Portfolio Strategy, provides his 12-month outlook for global equity markets.


EM Recovery Is in Progress, May Gain Momentum Later This Year

We’re starting to see a recovery in Emerging Markets, led by Taiwan and China. Broad upside momentum should increase as we approach the Federal Reserve’s anticipated easing cycle later in the year. Earnings growth is off to a slow start in 2024 but I expect it to outpace international developed markets and keep up with the U.S. by year end.



The economic and market forecasts presented herein have been generated by Matthews and provided for informational purposes only. Forecasts are based on proprietary models and there can be no assurance or guarantee that the forecasts can or will be achieved.

Emerging Markets

  • Emerging Markets (EM) index returns have rebounded in recent months mostly due to positive technology exposure within Taiwan and a slight re-rating higher of multiples in China. I’m maintaining an overweight stance on EM even though earnings growth has fallen short of expectations this year. I expect earnings growth to accelerate and for EM to benefit as China’s performance is sustained and the Fed finally starts to implement rate cuts.
  • In Latin America, I’m retaining my neutral view given last year’s strong returns and the ongoing vulnerability of the region’s largest economies to tight monetary conditions.
  • I have upgraded my position on Asia ex Japan to slightly overweight as I believe China’s market will continue to deliver, helped by supportive government policy and the underweight positioning of market participants. Strong returns in the region in 2023 combined with a slow pick-up in earnings growth could still be a near-term headwind. However, lower rates later this year could re-ignite interest in the cyclical and technology heavy indices of South Korea and Taiwan.
  • Among single countries, I continue to be overweight on China. The government has announced measures to support local stock markets and additional corrective actions to address its challenges in consumer sentiment and property markets. We believe being structurally underweight on China at current valuations is an active risk not worth taking.
  • I remain neutral on India. I expect the Modi government to easily win the general elections and believe in India’s long-term structural growth story. However, elevated valuations make index investments vulnerable and requires active managers to be extremely selective.

Developed Markets

  • Japan’s comeback remains intact as the government continues to push undervalued companies to increase payout and buy-back ratios. I remain slightly overweight despite lackluster macro conditions and recent Japanese yen volatility as I believe Japan’s corporate earnings may be relatively insulated from the Fed’s higher-for-longer restrictive monetary policy.
  • In the U.S., sticky inflation has delayed monetary easing toward late 2024 while positive year-to-date equity performance reflects expectations that earnings growth will remain stable. My neutral position reflects elevated valuations amid higher-for-longer monetary policy.
  • I maintain my underweight on developed international investments, with the exception of Japan, due to tight monetary conditions and lower earnings growth consensus. Volatility in energy prices and the impact of the Ukraine and Middle East conflicts present further challenges.


David Dali is Head of Portfolio Strategy at Matthews. David serves as a macro thought leader and as a proxy for portfolio managers, providing insights and analytics to clients. He has spent much of his career allocating and investing in equities, fixed income, currencies and derivatives.

Emerging Markets is based on the MSCI Emerging Markets Index, which captures large and mid cap representation across 24 Emerging Markets countries. Constituents include: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Greece, Hungary, India, Indonesia, Korea, Kuwait, Malaysia, Mexico, Peru, Philippines, Poland, Qatar, Saudi Arabia, South Africa, Taiwan, Thailand, Turkey and United Arab Emirates.

Emerging Markets Latin America is based on the MSCI Emerging Markets Latin America Index, which captures large and mid cap representation across five Emerging Markets countries in Latin America, including Brazil, Chile, Colombia, Mexico, and Peru.

Asia ex Japan is based on the MSCI AC Asia ex Japan Index, which captures large and mid cap representation across two of three Developed Markets (DM) countries, excluding Japan, and eight Emerging Markets (EM) countries in Asia. DM countries include: Hong Kong and Singapore. EM countries include: China, India, Indonesia, Korea, Malaysia, the Philippines, Taiwan and Thailand.

China is based on the MSCI China Index, which captures large and mid cap representation across China A shares, H shares, B shares, Red chips, P chips and foreign listings (e.g. ADRs). 

India is based on the MSCI India index, which is designed to measure the performance of the large and mid cap segments of the Indian market.

Japan is based on the MSCI Japan index, which is designed to measure the performance of the large and mid cap segments of the Japanese market.

U.S. is based on the MSCI USA index, which is designed to measure the performance of the large and mid cap segments of the U.S. market.

International is based on the MSCI World ex USA index, which captures large and mid cap representation across 22 of 23 Developed Markets (DM) countries-- excluding the U.S. DM countries include: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland and the U.K.



The views and information discussed in this report are as of the date of publication, are subject to change and may not reflect current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. Investment involves risk. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. Investing in small- and mid-size companies is more risky and volatile than investing in large companies as they may be more volatile and less liquid than larger companies. Past performance is no guarantee of future results. The information contained herein has been derived from sources believed to be reliable and accurate at the time of compilation, but no representation or warranty (express or implied) is made as to the accuracy or completeness of any of this information. Matthews Asia and its affiliates do not accept any liability for losses either direct or consequential caused by the use of this information.