Emerging markets (MME=F) are in the spotlight as they brace for their steepest decline in seven weeks as several national elections unfold globally. Pictet Asset Management Chief Economist Patrick Zweifel joins the Morning Brief to share his outlook on this development.
Zweifel notes that markets tend to "focus less on the immediate implications of the elections and more on the underlying fundamentals," assessing how election outcomes will shape the broader economic landscape. Turning to India, where markets lost $386 billion in value following the national election results, Zweifel deems this reaction as "overdone" for three key reasons: first, "game-changing policies" were implemented under previous government coalitions; second, India’s "very federal structure" mitigates the impact of a single election; and third, Prime Minister Modi has "been personally committed" to fiscal gains.
On the global inflation front, Zweifel explains, "I think we do have a much bigger force at work, which is the globalization of services taking place."
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