Expect 10-15% returns in EM credit, 8-12% in EM equities and local debt, and 2-3% FX gains against the greenback in 2023 as dollar denominated debt will trump local currency bonds amid duration gains.
Hard currency exposure should be added later in the year, in our view, when a global recession is better priced, for strong full-year returns.
Recommend being long the HSCEI Index; we see upside risks in Chinese equities amid the reopening in the second quarter, pent- up savings and easing on the property sector.
Our top trades include long JPY vs CNH, long AUD to CLP, short INR and IDR to the USD. - UBS Strategy
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