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JPMorgan upgrades emerging market equities as Sino-US trade war eases
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JPMorgan Chase CEO Jamie Dimon speaks during the Global Markets Conference in Paris on May 15, 2025. (Pool via REUTERS/Michel Euler)
J
.P.Morgan upgraded its rating on emerging market (EM) equities to "overweight" from "neutral" on Monday, citing easing US-China trade tensions and a softer dollar.
Last week, the US and China agreed to a 90-day tariff reduction, with the US cutting duties on Chinese goods to 30 percent from 145 percent and China lowering tariffs on US imports to 10 percent from 125 percent, fueling hopes of easing global trade tensions.
"De-escalation on US-China trade front reduces one significant headwind for EM equities," JPM analysts said in a note, adding that the stocks would be further helped by a weakening of the greenback in the second half of this year.
J.P.Morgan remains positive on India, Brazil, the Philippines, Chile, the UAE, Greece, and Poland within emerging markets, and sees a promising opportunity in China, particularly in technology stocks.
"While this is unlikely to be the end of trade noise, we think that the worst of it is likely behind us," the Wall-Street brokerage added.
The MSCI emerging markets stock index is up 9 percent so far this year, as confidence in US assets, including the safe-haven dollar, has weakened amid concerns over President Donald Trump's erratic and aggressive policies.
The dollar index is down 7.5 percent so far this year.
EM equities have lagged developed markets by a cumulative 40 percent since 2021, according to the brokerage.
Stock valuations now look attractive as they trade at 12.4 times its 12-month forward earnings compared to developed markets' 19.1, JPM said.
