Resurgent consumer demand, improving economic growth and attractive stock market valuations have boosted the popularity of emerging markets (EM) this year. HSBC remains committed to its “cautiously constructive” stance in 2025 as US President-elect Donald Trump prepares to return to office in January. “There is no sugar-coating that tariffs and a strong U.S. dollar are downside risks,” the investment analysts wrote in a Dec. 2 research note. They observed that the risk-reward balance for emerging market stocks “vs. consensus is better” because the growth dynamics of emerging market stocks are “relatively favorable” compared to developed markets. “If U.S. tariffs are targeted primarily at specific markets such as mainland China, rather than imposed generally, some emerging market economies may benefit from adjustments in trade flows,” they explain. They highlight that India, South Africa and Brazil “arguably less susceptible to trade impacts.” Tensions. ” Emerging markets on the MSCI list include Brazil, China, Greece, India, Indonesia, South Korea, Mexico and Qatar. HSBC analysts continue to take a global perspective and see “the rationale for modest overweighting in emerging markets despite the U.S. election outcome” could reinforce an era of exceptionalism in U.S. stocks. Here are two of the bank’s top lesser-known stock ideas: XP Inc HSBC is bullish on XP Inc and has a $25 price target on the stock, up from Wednesday’s close There is 90% upside potential. Analysts note that the Brazilian investment platform offers a range of equities, fixed income, real estate investment trusts (REITs) and pension plans, making its shares “very relevant to Brazil’s policy rate cycle.” XP shares have fallen nearly 50% this year, mainly after the start of Brazil’s interest rate hike cycle in September. The country’s central bank said it may need to raise interest rates further if inflation worsens. “The high interest rate environment has put pressure on net inflows and also signaled a shift away from equities into fixed income assets, which typically offer lower yields for asset managers such as XP,” HSBC analysts wrote. Still bullish on XP as the company “continues to demonstrate resilient earnings performance,” with EPS (earnings per share) expected to grow at a CAGR of 12% in 2022 and 2024. to 7% in 2023 and 2024. Analysts at the bank believe the market is “too pessimistic about Cemex.” They noted that potential import tariffs against other countries would “likely benefit Cemex’s U.S. business,” which analysts estimate will account for 35% of the company’s EBITDA by 2025. 4.6 times the enterprise value. 8.6- There is a 46% discount to 8.6x. HSBC analysts added: “With its strong pricing power and exposure to U.S. infrastructure spending, we see strong re-rating potential as Mexico’s macro concerns ease.” HSBC targets Cemex U.S. depositary receipts The price is set at $9, with upside potential of approximately 62.2% from Wednesday’s closing price. —CNBC’s Michael Bloom contributed to this report.
HSBC selects 2 “Best” emerging market stock ideas for 2025 | Real Time Headlines
RELATED ARTICLES