Need to Know Investment Podcast · Coutts

Need to Know - 21 September, Emerging Market Insights

·40 min·2 clips

China has “all the symptoms of a balance sheet recession,” with deflation, property declines, and heavy debt.

The episode begins with Sarah and David settling into their weekly format. David opens with a number that points straight at China: 200 million. That figure refers to the number of people China's labor force could increase by if the retirement age were raised to 65. Sarah then offers her own number, and the exchange keeps the opening light before the discussion turns serious. From there, they move into the broader state of emerging markets. David argues that the fundamentals are better than they were a decade ago. He points to improved current account balances as part of that case. He also notes that emerging markets carry less dollar-denominated debt than they once did. Foreign-exchange reserves are larger as well, which gives many countries more room to absorb shocks. Those structural improvements, he says, have helped, but they have not delivered a clean run of performance. The pair then compare emerging markets with developed markets over recent years. In 2022, emerging markets fell sharply, and the MSCI Emerging Markets Index dropped about 20 percent in dollar terms. Developed markets also sold off, with the All Countries World Index down about 18 percent. The conversation then turns to 2023. Emerging markets recovered, but only by about 9.8 percent, while the broader All Countries World Index rose about 22 percent. That gap becomes the core of the episode’s argument. China is presented as a major reason the gap persists. The hosts frame China as a large component of the emerging-markets universe and as a country wrestling with how to generate growth and stimulus. They do not treat the region as a single trade. Instead, they separate the healthier fundamentals picture from the more mixed return picture. The discussion is careful, unsensational, and built around context rather than a single headline call. The show ends with the standard investment disclaimer and a reminder that the views are accurate at the time of recording but subject to change.

As heard by us

A clear, data-led reset on why emerging markets have lagged and where the pressure sits.

Need to Know frames a market check-in without stretching for more than it has. It starts with China's retirement-age data point, then moves cleanly into the pressure points around emerging and developed markets.

Read the full review in PlayNext →

Why you'd press play

You want a clear read on why emerging markets have lagged developed markets.

Read the full recommendation in PlayNext →

Listen to the show on

Apple Podcasts Spotify

Play clips from this episode More from Need to Know Investment Podcast