EM & APAC Equity Strategy "A fresh look post Iran conflict" Tirumalai

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EM & APAC Equity Strategy "A fresh look post Iran conflict" Tirumalai

aggregate growth expectations are relatively weak. In our scorecard looking at mix of

valuations and fundamental outlook, Mexico screens expensive (Figure 35EM/APACmarkets'valuationsandearningsscorecard:Mostatractivemarketsontop). We retain

overweight on Brazil: Contrary to Mexico, Brazil screens among the least expensive.

While there is uncertainty of the elections coming up in October, valuations are already

ascribing a low probability of future fiscal reform, in our view.

EMEA: Upgrade Saudi and introduce UAE as overweight

UAE is the most likely 'coiled-spring' markets emerging out of the Iran conflict. UAE saw

the sharpest earnings cuts across EM since the start of the conflict, but the economy has

been surprisingly resilient (looking at property prices, bank lending etc). UAE is currently

one of the most attractive markets on our fundamentals scorecard. We've had a

cautious underweight stance on Saudi Arabia for over 18 months. The market has now

shed a lot of the earlier valuation premium, and has seen decent EPS upgrades recently.

We stay neutral South Africa and Poland.

ASEAN: upgrade SG/TH, add VN OW, downgrade ID/PH

We have some busy movements in our views in ASEAN. We remain overweight

Malaysia, as relatively stable macro, data centre/AI themes and the new MY value-up

program can help support market. We include Vietnam into our ratings universe with

an overweight stance, given its strong macro set up while the upcoming FTSE EM

inclusion can be a sustained catalyst - albeit we acknowledge valuations are punchy.

Singapore's (u/g to neutral) market reforms through EQDP program should help

support equities, while the economy is emerging as a regional 'safe haven'. Thailand (u/