1. China–Signs of a rebound: Purchasing manager indexes in China rebounded in March, with the Caixin/S&P Global index reaching its highest level in over a year. Drivers of the rebound included rising raw material purchases and inventories. Chinese industrial companies may be restocking ahead of the government’s planned 20% increase in special bond issuance this year to $680 billion. The increase in special bond issuance is linked to the official gross domestic product (GDP) growth target of ‘around 5%’ in 2024.

2. India confirmation of election date: India will go to the polls on 19 April, with voting in the general election continuing over six weeks. The incumbent Bharatiya Janata Party (BJP), led by Prime Minister Narendra Modi, is expected to win comfortably. Investors are focusing on whether the party and its partners can win 358 seats—or a two-thirds majority in the lower house—which will enable them to make constitutional changes.

3. Emerging market valuations: The price-to-earnings discount for emerging markets (EMs) relative to developed market (DM) peers was 35% in March. Historically, EMs trade at a valuation discount to DMs; however, the gap has widened over the past 12 months on a narrowing of the GDP growth differential and higher DM earnings growth. Looking ahead, the GDP growth differential may widen in favour of EMs. In combination with higher earnings growth this year and next, we think these factors could act as a catalyst for investors to reassess their allocations to emerging markets, potentially leading to increased fund inflows and improved equity market performance.

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