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BNY says EM equity positioning favors South Korea and Taiwan

BNY’s Geoff Yu notes that excluding South Korea and Taiwan, EM’s global positioning share is barely above 4%, the lowest in three years.

Reported · Written up by our desk · Major Pairs

BNY’s Geoff Yu says emerging markets equity exposure is heavily concentrated in South Korea and Taiwan, leaving most other EM countries at historically low allocation levels, according to FXStreet.

Yu points to China’s weakness and poor EM data as factors that have already pushed valuations to price in disinflation and weak growth.

The BNY analyst argues that adding EM exposure ahead of a potential recovery could offer a better risk-reward profile than current positioning suggests, given the possibility of improved cyclical conditions or stimulus.

Yu also highlights that positioning signals imply limited earnings growth in emerging markets outside semiconductors, and describes that assumption as overly pessimistic if recovery momentum appears.

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