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1、January 2022Global Head of Investment ManagementStephanie Braming,CFA,PartnerPortfolio ManagersMarcelo Assalin,CFA,PartnerClifford Lau,CFA Vivian Lin Thurston,CFA,PartnerTodd McClone,CFA,PartnerGlobal StrategistOlga Bitel,PartnerThis year is shaping up to be one of transition across emerging markets

2、(EMs).As COVID restrictions ease,many EMs are reopening and economic activity is rising.China continues to advance its Common Prosperity initiative while transitioning into accommodative monetary policy.Meanwhile,inflation looms,and central banks in some developed markets have begun tightening.Now,t

3、wo years after the virus emerged,we share our thoughts about how EM equity and debt are likely to fare in this reawakening.Emerging Markets:A Great Awakening GLOBAL EQUITY/EMERGING MARKETS DEBT Investment Management 2|EMERGING MARKETS:A GREAT AWAKENING As we entered 2021,much of the world celebrated

4、 human ingenuity and unprecedented global collaboration to develop COVID-19 vaccines,which promised to reduce severe lockdowns and promote a return to normalcy.While 4.3 billion people had received at least one dose of a vaccine by year-end,uneven reopenings and supply-chain disruptions combined wit

5、h labor shortages increased inflationary pressures.The inflationary impulse has remained stubbornly persistent and is expected to result in continued near-term tightening by developed market central banks.This dampens near-term expectations for EM growth and returns.At the same time,Chinathe worlds

6、second largest economyis focused on Common Prosperity,which has affected corporate valuations across a number of industries and has altered risk,return,and growth expectations.Looking forward,there are changing growth drivers resulting from the global pandemic,shifting consumer preferences,and chang

7、ing country dynamics,all of which are supported by technological advances.At the same time,existing trends in digitalization and stakeholder capitalism are accelerating and changing the competitive dynamic in emerging and developed markets alike.In the following pages,our teams explore these ideas,a

8、s well as near-term opportunities and risks for EM equity and debt,with a specific focus on China.Introduction“While EMs are generally viewed monolithically,for discerning investors there is a wide array of opportunities from which to choose.”Stephanie G.Braming,CFA,PartnerStephanie G.Braming,CFA,Pa

9、rtnerWILLIAM BLAIR INVESTMENT MANAGEMENT|3While EMs are generally viewed monolithically,for discerning investors there is a wide array of opportunities from which to choose.Today,EM companies represent more than one-third of firms delivering the highest sustainable value creation globally,well above

10、 weightings in global equity benchmarks.In addition,while interest rates are expected to increase in many developed economies,EM debt spreads remain higher than normal and are particularly attractive relative to a number of fixed-income alternatives globally.With this backdrop,we believe that there

11、is a compelling opportunity for investors,as we believe current EM headwinds should ameliorate through the second half of 2022,given low market expectations,supportive valuations,and solid fundamentals.Best,Stephanie G.Braming,CFA,Partner GLOBAL HEAD OF INVESTMENT MANAGEMENTIntroduction(continued)“E

12、M companies represent more than one-third of firms delivering the highest sustainable value creation globally,well above weightings in global equity benchmarks.”Stephanie G.Braming,CFA,Partner4|EMERGING MARKETS:A GREAT AWAKENING EXHIBIT 1 COVID Vaccination Rates in EMsThe percent of the population t

13、hat has some form of vaccination against COVID-19 varies dramatically across EMs.As vaccine rollouts become more widespread in 2022,the narrowing of the vaccination gapboth between emerging and developed markets and among individual EMsshould lead to more broad-based economic growth across EMs.By al

14、l accounts,2021 was a good year,economically speaking.Production and distribution challenges of the mass vaccination drive are largely resolved.The worlds largest economies are firing on nearly all cylinders.Yet the latest COVID-19 variant suggests that the global pandemic is not quite in the rearvi

15、ew mirror,so the associated economic disruption and the resultant inflationary pressures may persist well into 2022.As of early December 2021,more than half of the worlds populationor roughly 4.3 billion people had received at least one dose of the various COVID-19 vaccines.Annualized COVID-19 vacci

16、ne production ramped up from fewer than 100 million doses in January 2021 to more than 12 billion doses by December 2021.This extraordinary achievement resulted from close scientific,technical,and financial collaboration across companies;the effort defied national borders and spanned the globe.It su

17、ggests that requiems for globalization may be premature.Macro|“Slowflation”to ExpansionOlga Bitel,Partner GLOBAL STRATEGISTSource:World Health Organization and William Blair,as of December 2021.0%20%21%40%41%60%61%80%81%100%Mexico63.4%Ukraine32.4%South Africa31.5%China84.3%India58.3%Brazil75.1%Boliv

18、ia46.1%Russia46.6%EM Growth Depends on Three Developed Demand CentersThe vast majority of EMs are small,open economies whose fortunes depend on what happens in the worlds three principal demand centers:the United States,Europe,and China.Put another way,EMs are a high-beta play on developed market gr

19、owth.Interest rates,exchange rates,and commodity prices are largely set by the economic and liquidity conditions in the three global demand centers.At the same time,these pricesinterest rates,exchange rates,and commodity pricesset binding constraints on economic outcomes in most EMs.WILLIAM BLAIR IN

20、VESTMENT MANAGEMENT|5Macro|“Slowflation”to Expansion(continued)Our expectations for output growth and inflation in 2022 rest on two key assumptions.First,we expect global vaccination efforts to reach near-universal levels by the second half of 2022 so that end-to-end supply chains can resume working

21、 as intended.Second,we assume structural growth decelerates to pre-pandemic trends as economies approach the pre-2020 output trajectory.Our outlook for supply-chain normalization and healthy economic activity is predicated on the expectation that COVID-19 follows past pandemic influenza experiences,

22、becoming less virulent over time.Exhibit 2 on the following page illustrates our estimates for the implied output trajectory in 2022.The top baseline reflects the conceptual output path for major developed market economies,assuming a 2%annual growth rate,consistent with the pre-pandemic experience.T

23、he U.S.economy is much closer to its pre-pandemic output trajectory than are major European economies.Based on current trends,we expect the United States to reach its pre-crisis output by summer 2022 before settling into 2%annualized growth.In this scenario,full economic recovery implies significant

24、 sequential deceleration in annualized quarterly growth in 2022.The global economy began to recover some of its operating momentum.Economic recovery was decidedly V-shaped,in sharp contrast to our experience after the Global Financial Crisis(GFC).By the middle of the year,both sides of the Atlantic

25、were growing at double-digit rates in year-over-year terms.The Atlanta Federal Reserve(Fed)nowcast model currently estimates that the U.S.economy is expanding at a 6.8%quarter-over-quarter annualized rate.The emergence of the Omicron variant in late November reminded us that the pandemic is not quit

26、e in the last innings,to borrow a baseball analogy.More supply-chain disruptions may lie ahead,and the associated inflationary pressures will likely persist this year.So what do all these developments purport for the global economy in 2022?The world economy most likely entered 2022 with strong growt

27、h momentum,which will likely dissipate as the major economies near their pre-COVID trajectory.Once the pandemic is behind us,unpredictable supply disruptions should recede,and the current bout of inflation will likely subside.“Slowflation”may make for a tougher backdrop for equities,in contrast to t

28、he strong returns equities provided as the“mother of all recoveries”unfolded.“The U.S.economy is much closer to its pre-pandemic output trajectory than are major European economies.”Olga Bitel,Partner6|EMERGING MARKETS:A GREAT AWAKENING Most European economies remain somewhat below their pre-pandemi

29、c output trajectory,which leaves significant scope for strong growth throughout much of 2022.Thus,we believe European economies should generate stronger sequential growth than the United States,as we expect these economies,except Spain,to fully recover to pre-pandemic output by the end of 2022.As Ch

30、inas economy fully recovered by the end of 2020,growth in China decelerated materially in 2021,to the point where macroeconomic policy is already becoming more supportive of near-term growth pickup on the margin.On December 6,2021,the Peoples Bank of China announced a 50-basis-point reserve requirem

31、ent ratio(RRR)cut,enabling banks to lend more.We expect Chinas economy to accelerate gradually in 2022 as domestic policy is calibrated to reach annual output growth of 6%or more.With output still well below trend on both sides of the Atlantic,rising inflation,especially in the United States,is larg

32、ely a function of persistent and sudden supply disruptions as the pandemic continues to wreak havoc.COVID-19 exposed the weakness of pairing global supply chains with purely national responses to medical challenges:China pursued zero tolerance of infections,while the United States and many other cou

33、ntries embraced economic activity while minimizing severe illness outcomes.Macro|“Slowflation”to Expansion(continued)Sources:Macrobond and William Blair analysis,as of January 2022.Q4 2019=100.EXHIBIT 2Actual and Forecast Output Levels for Major Economies Our estimates for the implied output traject

34、ory in 2022.Based on current trends,we expect the United States to reach its pre-crisis output by summer 2022 before settling into 2%annualized growth.FranceItalySpainUnited States2%Annual Growth AssumptionGermanyQ4 2019Q1 2020Q2 2020Q3 2020Q4 2020Q1 2021Q2 2021Q3 2021Q4 2021Q1 2022Q2 2022Q3 2022Q4

35、20221071029792878277WILLIAM BLAIR INVESTMENT MANAGEMENT|7This is why goods prices are rising at a 12%rate,a sharp and temporary reversal of multi-decade price deflation.Exhibit 3 details annual changes in U.S.goods price inflation relative to shipping rates.In addition,U.S.consumers feel another,mor

36、e concentrated impact of COVID-19 on car prices.Many car producers underestimated the strength of demand resumption and canceled semiconductor orders,so today the current annualized supply is running 3 million to 4 million vehicles short of the pre-pandemic rate.A lack of new cars,in turn,elevates t

37、he prices of used vehicles,which is evident in the U.S.monthly consumer price inflation data.Exhibit 4 on the following page shows new and used vehicles abnormal contribution to annual inflation as the recovery unfolded.The supply of goods has become a victim of rolling supply disruptions.Such diver

38、gence in national response translates into impossible-to-anticipate,sporadic,highly disruptive closures of plants and ports located in China.These rolling closures reverberated throughout the world economy for months after the initial disruption,as Chinas ports process nearly 50%of global container

39、volumes.Macro|“Slowflation”to Expansion(continued)Jan.17Apr.17Jul.17Oct.17Jan.18Apr.18Jul.18Oct.18Jan.19Apr.19Jul.19Oct.19Jan.20Apr.20Jul.20Oct.20Jan.21Apr.21Jul.21Oct.21Source:Bloomberg and Macrobond,as of January 2022.EXHIBIT 3Goods Price Inflation Has Coincided with Supply-Chain DisruptionsThe su

40、pply of goods has become a victim of rolling supply disruptions.Such divergence in national response translates into impossible-to-anticipate,sporadic,highly disruptive closures of plants and ports located in China.Year-Over-Year U.S.Goods Inflation(Right Axis)Price Per 40-Foot Container Box(Left Ax

41、is)14%12%10%8%6%4%2%0%2%4%$9,000$8,000$7,000$6,000$5,000$4,000$3,000$2,000$1,000$0“Goods prices are rising at a 12%rate,a sharp and temporary reversal of multi-decade price deflation.”Olga Bitel,Partner8|EMERGING MARKETS:A GREAT AWAKENING Macro|“Slowflation”to Expansion(continued)Sources:U.S.Bureau

42、of Labor Statistics and William Blair analysis,as of January 2022.ShelterNew and Used CarsGasOtherMar.12Jul.12Nov.12Mar.13Jul.13Nov.13Mar.14Jul.14Nov.14Mar.15Jul.15Nov.15Mar.16Jul.16Nov.16Mar.17Jul.17Nov.17Mar.18Jul.18Nov.18Mar.19Jul.19Nov.19Mar.20Jul.20Nov.20Mar.21Jul.21Nov.21EXHIBIT 4 Contribution

43、 to U.S.Year-Over-Year InflationA lack of new cars elevates the prices of used vehicles,which is evident in the U.S.monthly consumer price inflation data.8%7%6%5%4%3%2%1%0%1%2%3%As the supply of semiconductors normalizes and new vehicles roll off the assembly lines in sufficient quantities,we believ

44、e price pressures are likely to subside.Purchasing patterns suggest that consumers do not expect pricing pressures and scarcity to persist:there are no signs of hoarding.In fact,the supply-demand adjustment is occurring as expected:consumers are postponing purchases in response to higher prices.Over

45、all demand declined more than 10%since the reopening peak,with much of the deceleration concentrated in motor vehicles.Consumers are postponing purchases,and surveys indicate that affordability is not a deterrent.Instead,people believe that prices are too high at the moment and expect them to declin

46、e.We believe 2022 is shaping up to be one of slowing toward healthy rates of economic growth and inflation,thereby paving the way to a sustainable,multiyear expansion.20%15%10%5%0%5%10%15%WILLIAM BLAIR INVESTMENT MANAGEMENT|9In the second half of 2021,EM equities faced a host of headwinds that cause

47、d the asset class to pull back sharply from its midyear highs.In China,slowing economic growth was accompanied by uncertainty largely centered on the implications of ongoing reforms in the Common Prosperity initiative for Chinese technology,education,healthcare,and other critical segments of the cou

48、ntrys economy.The surge in COVID-19 cases related to the Omicron variant interrupted the progress that many EMs had been making in reopening their economies.In addition,varying monetary policy measures,both within EMs and between emerging and developed markets,have created a backdrop that is challen

49、ging for EM equities from a cyclical perspective in 2022.We expect these challenges,however,to dissipate as we progress through 2022,leading to what could be an array of attractive valuation opportunities in mid-2022.With EM equities trading near record discounts to developed markets equities,it is

50、important for investors to assess how the diverging short-term and longer-term outlooks for EM equities should affect their positioning in this critical asset class.Fears of Another“Taper Tantrum”Are OverblownEM equity investors are naturally concerned about surging U.S.inflation,acceleration in the

51、 tapering of the U.S.Todd McClone,CFA,PartnerPORTFOLIO MANAGER,EM EQUITIESEM Equity|Dissipating Headwinds,Attractive Valuation Opportunities Current Account Balances,During 2013 Taper TantrumCurrent Account Balances,Latest QuarterSource:Bloomberg,as of December 2021.EXHIBIT 5EMs Are in a Stronger Fi

52、scal Position to Weather U.S.Monetary TighteningThe current account balances of EM countries are more supportive of economic growth than they were in 2013.This improved fiscal positioning,along with stronger economic growth forecasts,should allow EMs to be more resilient to pressures that will likel

53、y accompany U.S.monetary tightening in 2022.TaiwanSouth KoreaMalaysiaSouth AfricaMexicoRussiaChinaPhilippinesIndiaThailandIndonesiaBrazilTurkey10|EMERGING MARKETS:A GREAT AWAKENING account deficits than they do today,along with somewhat overvalued currencies.This was especially the case with the so-

54、called“fragile five”:India,Indonesia,Turkey,Brazil,and South Africa.In our view,EM economies are now in a much better position to weather the U.S.tightening cycle than they were in 2013.EM gross domestic product(GDP)growth expectations are higher and current account balances are generally supportive

55、,as shown in exhibit 5 on the previous page.Meanwhile,EM inflation is generally lower than it was during the Bernanke taper,with a few notable exceptions,such as Brazil and Turkey.We also expect that any increased USD strength will likely ebb toward the middle of 2022 as investors get more visibilit

56、y into the path of U.S.interest rates.Federal Reserves(Fed)asset-purchase program,and the fact that expectations for increases in the federal funds rate have been pulled forward.Historically,EMs have underperformed developed markets during periods of rising U.S.interest rates and a strengthening U.S

57、.dollar(USD).More pointedly,many EM investors have vivid memories of the 2013“Taper Tantrum,”during which EM equities dramatically underperformed developed markets as Ben Bernankes Fed began to taper its asset purchases.While U.S.monetary tightening and a strengthening USD will certainly present hea

58、dwinds for EM equity markets,we do not expect 2022 to be a repeat of 2013.For historical perspective,it is important to remember that going into 2013,EMs had significantly outperformed developed markets during the runup to the Taper Tantrum.EMs also had generally higher inflation and larger current

59、EM Equity|Dissipating Headwinds,Attractive Valuation Opportunities (continued)Emerging Markets AverageDeveloped Markets AverageEmerging MarketsDeveloped MarketsFOLLOWING FISCAL YEAR(FY2)P/E RATIOSSource:Factset,as of December 2021.Developed markets are represented by the MSCI World Index.EMs are rep

60、resented by the MSCI Emerging Markets Index.EXHIBIT 6Valuation Gaps Are Wide and ExpandingThe gap between EM and developed market equity valuations reached its widest point in nearly two decades at the end of 2021.This valuation gap creates the potential for attractive entry points for EM investors,

61、but we believe selectivity among countries and companies remains paramount.22x20 x18x16x14x12x10 x8x6xDec.03Aug.04Apr.05Dec.05Aug.06Apr.07Dec.07Aug.08Apr.09Dec.09Aug.10Apr.11Dec.11Aug.12Apr.13Dec.13Aug.14Apr.15Dec.15Aug.16Apr.17Dec.17Aug.18Apr.19Dec.19Aug.20Apr.21Dec.21WILLIAM BLAIR INVESTMENT MANAG

62、EMENT|11China Headlines Attractiveness of EM ValuationsIn addition to strong macro fundamentals in EM countries,EM equity valuations look very attractive relative to developed markets heading into 2022.In fact,the gap between EM and developed market valuations is wider now than at any point since 20

63、03,as shown in exhibit 6 on the previous page.This reflects the probability that equity markets have already priced in the kind of economic effects that occurred in 2013.We believe that much of this gap is the result of EM valuations that still do not appropriately reflect the importance of technolo

64、gy and other growth-oriented,higher-valuation sectors within the MSCI Emerging Markets Index.In 2008,energy and materials made up about 40%of the index,while the higher-valuation IT,consumer,retail,and media sectors represented only about 10%,according to MSCI.Today,those proportions have more than

65、reversed,and EM is the most tech-heavy region other than the United States.Current valuations,however,still seem tied to the outdated notion that EM economic activity is dominated by commodities and low-value manufacturing.For growth investors,we believe that the current valuation gap between EMs an

66、d developed markets offers an especially attractive opportunity to invest in EMs at undervalued prices.Still,the valuation story within EMs is far from monolithic.This is especially true when looking at the two largest developing economiesChina and India.Chinese equities traded at the lower end of t

67、heir historical valuation range at the end of 2021.While China led the world in recovering from the early effects of the COVID-19 pandemic,its economic recovery also compelled the Peoples Bank of China(PBOC)to normalize and tighten its monetary policy.These efforts,together with the emergence of COV

68、ID variants,precipitated a slowdown in the Chinese economy.Increased regulations implemented in support of Chinas Common Prosperity agenda,particularly those affecting internet industries,exacerbated the slowdown and negatively affected investor sentiment.Against this backdrop,Chinese equities under

69、performed in 2021,with MSCI China Investible Market Index(IMI)falling 21%in USD terms as of year-end.Given Chinas economic slowdown,in December 2021 the PBOC announced a reduction in the reserve requirement ratio(RRR)and cut the one-year loan prime ratethe first cut in almost two yearssignaling a ne

70、ar-term change in Chinese monetary policy.This shift in monetary policy will also be perpetuated by Chinas increased focus on growth stabilization in 2022 as signaled during the Central Economic Work Conference held by the Chinese central government in December 2021.We believe that this shift to a m

71、ore accommodative monetary policy and increased support for growth offer investors an attractive opportunity to increase their allocations to China.Not surprisingly,the final weeks of 2021 saw increased fund flows to China as investors sought to position their portfolios ahead of the PBOCs efforts t

72、o spur growth.While unsettling news such as the Evergrande default,the potential delisting of many ADRs,and continued regulatory uncertainty paint a cloudy picture for Chinese equities,overall we are incrementally more positive on Chinese equities in the near term,thanks to the supportive macro poli

73、cies mentioned above.While Indian equities are currently trading at a premium to most other EMs,we believe that this reflects the fact that India generally has very attractive secular growth characteristics.Factors such as demographics,increased technology adoption,improving but still vast underpene

74、tration in financial services,rising demand for consumer staples,and strong corporate management teams indicate to us that current valuations are justified.Consistently strong earnings growth among Indian companies is supportive of these valuations and suggests that Indian equity multiples may have

75、additional room to increase going forward.EM Equity|Dissipating Headwinds,Attractive Valuation Opportunities (continued)“The gap between EM and developed market valuations is wider now than at any point since 2003.”Todd McClone,CFA,Partner12|EMERGING MARKETS:A GREAT AWAKENING EM Recovery Likely to B

76、roaden in 2022,but Country Selection Is CriticalAlong with our optimism about China and India,we expect a much greater number of EM countries to participate in equity market upside in 2022 than in 2021.Strikingly,2021 produced the greatest degree of dispersion among EM returns in more than a decade,

77、as exhibit 7 illustrates.Varying degrees of COVID-19 shutdowns and reopenings drove much of this dispersion,as did the different monetary policy responses that EM central banks pursued in 2021.As 2022 begins,many EM countries appear set to reopen their economies more fully,especially Southeast Asian

78、 constituents such as Thailand,Indonesia,Vietnam,and the Philippines.We believe this should lead to a broadening of participation in the global economic recovery across EMs.Nevertheless,country selection among EM constituents remains critical.Variations in inflation and monetary policy are likely to

79、 foster some continued dispersion in equity market returns,as will evolving political dynamics.For example,Brazilian inflation and interest rates remain high,while the leading candidate in the next presidential election(Luiz Incio Lula da Silva)supports a socialist economic agenda,creating uncertain

80、ty for investors in Brazilian equities.EM Equity|Dissipating Headwinds,Attractive Valuation Opportunities (continued)Source:Factset,as of December 2021.Past performance is not indicative of future results.Countries are those in the MSCI Emerging Markets Investible Market Index(IMI).Indices are unman

81、aged and do not incur fees or expenses.A direct investment in an unmanaged index is not possible.EXHIBIT 7Broad Equity Return Dispersion in 2021In 2021,equity returns among EMs varied dramatically as countries progressed through phases of economic reopening from the pandemic at different paces.The c

82、ontinued rollout of vaccinations should lead to more broad-based upside participation in 2022.60%50%40%30%20%10%0%10%20%30%40%Czech RepublicUAEIndiaTaiwanIsraelMexicoRussiaQatarMoroccoPolandEgyptHungarySouth AfricaIndonesiaThailandPhilippinesMalaysiaSouth KoreaColombiaBrazilChilePeruChinaTurkeyWILLI

83、AM BLAIR INVESTMENT MANAGEMENT|13We are also monitoring developments with the Omicron variant of the COVID-19 virus.As of this writing,the variant appears more transmissible but less lethal than previous versions of the virus.EM healthcare systems tend to be less robust than their developed market c

84、ounterparts,drawing into question how well certain EMs will be able to respond to large numbers of Omicron cases.For now,we are encouraged by the relatively low and manageable hospitalization rates for Omicron cases in South Africa,where the variant was first detected.In fact,new cases and hospitali

85、zations related to South Africas most recent infection wave seem to have already peaked.Nevertheless,EM investors should continue to monitor the pandemic and its evolution closely.Secular Trends Create Opportunities for Sustainable Value CreationFor investors focused on sustainable value creation,we

86、 are encouraged by the expanding opportunity set within EMs.In 2002,EMs accounted for about 15%of the top quintile of companies globally in terms of sustainable value creation,which is an aggregate measure of returns on capital that we use to evaluate growth stocks,according to MSCI data and William

87、 Blairs analysis.In 2021,however,that figure grew to approximately 35%a remarkable increase that highlights the opportunity to find EM companies that excel at generating high returns on invested capital.Notably,much of this growth came from China,India,and other Asian countries such as Taiwan and So

88、uth Korea.This is a prime example of how the evolution of growth investing in EMs has shifted markedly toward Asia at the expense of Latin America and other regions over the past two decades.Within this expanding and increasingly Asian-dominated opportunity set for growth investors,we are focusing o

89、n several distinct secular themes:Consumer spending and e-commerce:The growth in spending on both staples and discretionary items among EM consumers is particularly compelling when we consider the potential for increased e-commerce activity.Despite the emergence of large,innovative local champions a

90、cross EMs,e-commerce penetration is still only about half of that seen in developed markets.Tech hardware:Semiconductors and other segments of technology hardware are experiencing surging demand,fueled largely by the proliferation of 5G,cloud computing,and the Internet of Things(IoT).In addition to

91、these secular trends,semiconductor manufacturers in EMs are benefiting from cyclical pricing power amid the global chip shortage.Indian financial services:Despite the Indian economys evolution toward greater development,it continues to be plagued by low levels of financial services penetration.Still

92、,the growth of Indians digital economy and other positive trends suggest that the country is near an inflection point in terms of bringing banking,insurance,and other financial services to a broader portion of its massive population.Despite Headwinds,EM Equities Provide Significant Upside PotentialD

93、espite headwinds from U.S.monetary policy and uncertainty about the Omicron variant,we believe that EM equities will provide investors with ample opportunities for growth in 2022.EMs generally strong economic fundamentals and a broadening of the global economic recovery should provide a particularly

94、 supportive backdrop for sustainable value creation.Meanwhile,we believe that high-quality EM companies will be well positioned to capitalize on powerful secular trends amid the continuing development of these markets.EM Equity|Dissipating Headwinds,Attractive Valuation Opportunities (continued)“The

95、 evolution of growth investing in EMs has shifted markedly toward Asia at the expense of Latin America and other regions.”Todd McClone,CFA,Partner14|EMERGING MARKETS:A GREAT AWAKENING Against this backdrop,we examine the fundamental,technical,and valuation factors that are shaping the opportunity se

96、t and risks in EM debt in early 2022.EM Fundamentals Continue to ImproveThe current environment suggests that fundamentals for EM debt are on track to keep strengthening.We estimate that gross domestic product(GDP)growth in EM countries will hit 4.8%in 2022,below the 7%growth rate in 2021 but above

97、pre-COVID trend levels.EM fiscal accounts should improve to-5.5%of GDP in 2022,from-6%in 2021 and-7.7%in 2020.At 1.6%of GDP,EM countries have maintained fairly strong basic balance levels,highlighting the resilience of EM external accounts even during the pandemic.EM countries current account surplu

98、s is expected to decline somewhat,driven by stronger domestic demand,but should remain at healthy levels.We anticipate that EM government debt as a percentage of GDP will stabilize at just over 60%.Inflation in EMs is expected to decline to 4.2%in 2022 from 4.3%in 2021.We anticipate that EM exports

99、will increase by 7.9%in 2022 from 2021,reflecting improvements in global trade and high commodity prices.In 2022,we foresee no systemic crisis and anticipate very low default rates.EM countries should benefit from strong multilateral and bilateral support,with ample and affordable funding.In particu

100、lar,the International Monetary Fund(IMF)has taken proactive measures through the increase of special drawing rights(SDR)allocations during the pandemic.Country-specific risks remain,particularly in China.After struggling significantly in 2021,the Chinese economy appears poised to improve in the firs

101、t half of 2022 and should benefit from stimulus support initiated in late 2021.Still,the countrys overall growth trend will likely decline as Beijing places an emphasis on the quality of growth and on higher value-added sectors.EM Debt|A Brighter Outlook for EM Debt The past year was a study in cont

102、rasts for investors;this was true for many asset classes,but particularly so in EM debt.After a remarkable recovery in global economic activity in the first half of the year,new concerns related to virus variants,inflation,and monetary-policy tightening emerged in the third and fourth quarters.The r

103、esult was a challenging backdrop for EM debt as investor sentiment deteriorated,leading to outflows out of EM debt portfolios,widening EM debt credit spreads,higher EM local bond yields,and weaker EM currencies.We anticipate that EM debt investors will continue to face several headwinds in the first

104、 half of 2022.These issues include a slowdown in Chinese economic activity,supply-chain disruptions,dysfunctional labor markets,rising energy prices,and persistently high inflation rates.Inflation in particular poses significant challenges,and many EM central banks have started to tighten monetary p

105、olicy in an attempt to rein in escalating prices.EM countries have started tightening as a way to get ahead of the Feds tapering of its bond-buying program,which we expect to be concluded in March 2022,followed by rate hikes later in the year.Despite these headwinds,we anticipate brighter days for E

106、M debt.Increased vaccine supplies should help narrow the“vaccination gap”between emerging and developed markets,leading to a more broad-based reopening of economies.Similarly,we expect disruptions in supply chains and labor markets to slowly resolve as countries around the world continue to improve

107、their management of the pandemic.Inflation should peak as a result of easing supply-side bottlenecks,slower increases in food and energy prices,and monetary tightening.Finally,by mid-2022,we expect that a majority of EM policy tightening will already be completed.Marcelo Assalin,CFA,PartnerHEAD OF E

108、M DEBTWILLIAM BLAIR INVESTMENT MANAGEMENT|15Corporate Credit Cycle May Hit an Inflection PointAfter benefiting from years of fundamental credit improvement,the EM corporate credit cycle is starting to show signs of accommodation.At an aggregate level,balance sheets and maturity profiles remain healt

109、hy,despite a slight increase in capital expenditures.Corporate capital structures cannot improve in perpetuity,but a renewed focus on growth or shareholder returns,if executed prudently by corporate issuers,shouldnt be viewed as a negative for lenders.Nonetheless,while default rates should remain we

110、ll contained,we dont believe that credit improvement will be a tailwind for the asset class in the near term.Commodity Prices Remain ElevatedHigher commodity prices have presented a mixed picture for EM countries.Elevated prices should provide a tailwind for commodity exporters,though spiking energy

111、 prices negatively affected oil-and gas-importing countries.Commodities overall experienced quite a rebound in 2021,with energy prices leading the way.For the year,crude oil prices(West Texas Intermediate)rose 61%and natural gas prices rose 38%,according to the Energy Information Administration.Thes

112、e sharp increases were driven by higher demand,constrained supplies by Organization of the Petroleum Exporting Countries(OPEC)and non-OPEC countries,and weather-related disruptions.We believe that supply and demand dynamics will remain supportive of energy prices in 2022.EM Debt|A Brighter Outlook f

113、or EM Debt(continued)Sources:Oxford Economics and William Blair estimates,as of October 2021.Shows GDP-weighted figures.EXHIBIT 8EM Countries Show Strong Fundamentals and ResilienceAfter falling into negative territory in 2020 because of the COVID-19 pandemic,GDP growth in EMs bounced back strongly

114、in 2021.Despite slowing growth rates projected for 2022,EM countries should be able to maintain fairly robust basic balance levels,highlighting the resilience of these economies even through global turbulence.EM Basic Balance(as a Percentage of GDP)EM Year-Over-Year GDP Growth 8%7%6%5%4%3%2%1%0%-1%-

115、2%-3%201920202021202216|EMERGING MARKETS:A GREAT AWAKENING EM Debt|A Brighter Outlook for EM Debt(continued)investors are well below peak levels and not in line with the size of the opportunity set.J.P.Morgan estimates that 2022 inflows will total$30 billion to$40 billion,just below long-term averag

116、es.Investor positioning is also supportive.Throughout 2021,investors reduced their positioning in EM debt during the“risk-off”sentiment,though we believe that a more benign environment could lead to larger allocations and inflows from investors in 2022,especially later in the year.On a relative basi

117、s,EM debt should remain attractive compared with other fixed-income assets.Continued low global ratesincluding negative interest rates in many developed marketsshould benefit EM debt.In addition,global liquidity,while past its peak,should remain ample,and we believe that any deterioration following

118、tighter monetary policies should be very gradual.Rebounding economic activity also supported demand for copper and iron ore.Iron ore prices began to normalize as investors assessed 2022 supply and demand activity,while copper prices remained elevated on the back of low inventories.Looking ahead,the

119、transition to electric vehicles and the infrastructure required for their operation will lead to new demand drivers for metals such as copper,nickel,and aluminum,benefiting countries with significant exports of these increasingly valuable resources.Technical Conditions Appear Generally PositiveIn ad

120、dition to healthy fundamentals,the technical backdrop should also be supportive for EM debt in 2022.Supply should remain constrained as a result of declining net refinancing needs due to improved fiscal accounts and prefinancing activities.Inflows into EM debt should continue to recover as allocatio

121、ns to EM debt by global Source:Bloomberg,as of November 2021.Shows real yields,which represent nominal 10-year bond yields less the Consumer Price Index.EXHIBIT 9Local-Currency EM Debt Offers Premium in Real YieldsCompared with other fixed-income assets,yields on local-currency EM debt remain attrac

122、tive.With few exceptions,inflation-adjusted yields of local-currency EM debt were in positive territory,in stark contrast to the negative real yields for most developed markets.EM Local CurrencyDeveloped Markets6%4%2%0%-2%-4%-6%PolandCzech RepublicHungaryRomaniaPhilippinesTurkeyChileThailandPeruMala

123、ysiaRussiaBrazilMexicoColombiaIndonesiaSouth AfricaUnited StatesEuropeCanadaNew ZealandNorwayUnited Kingdom DenmarkSwedenAustraliaSwitzerlandJapanWILLIAM BLAIR INVESTMENT MANAGEMENT|17EM Debt|A Brighter Outlook for EM Debt(continued)Still,this projection is very conservative,and there is a significa

124、nt chance that we do not see any sovereign credit defaults in 2022.We see value in selected EM corporate credit,where investors have a spread pick-up to sovereigns but with a significantly lower duration.In the local currency space,EM currencies remain fundamentally undervalued and feature a higher

125、carry compared with developed-market currencies.Balance-of-payment trends have become more positive in many markets,as many EM currencies are cheaper and interest-rate differentials versus developed markets have widened.EM local yield curves are steep and have already increased significantly.While d

126、eveloped-market central banks have generally maintained accommodative policies,in many EM countries monetary tightening is much closer to the end than the beginning of the cycle.Valuations for EM Debt Remain AttractiveEM debt appears attractively valued on both an absolute and relative basis,as spre

127、ads have remained wider than historical levels.EM sovereign high-yield spreads appear very compelling,as they are at heightened levels compared with their 10-year averages.EM sovereign high-yield spreads are particularly attractive versus U.S.high yield levels.EM credit spreads are well above develo

128、ped-market credit spreads,again significantly wider than their 10-year averages.In our view,EM debt investors are more than adequately compensated for default and loss-given-default risks.Our conservative probability-weighted default projection is approximately 2%,resulting in a potential negative i

129、mpact of approximately 50 basis points(bps)on the index level.400350300250200150100500Sources:Bloomberg and J.P.Morgan,as of November 2021.EM sovereign debt yields are presented by the J.P.Morgan Emerging Market Bond Index(EMBI).Global Diversified U.S.high yields are represented by the Bloomberg U.S

130、.Corporate High Yield Total Return Index.EXHIBIT 10 Valuations for EM Sovereign High-Yield Debt Appear AttractiveValuations for EM sovereign high-yield debt appear very attractive heading into 2022 compared with U.S.high yield bonds,as spreads have widened considerably from the long-term average.Sin

131、ce the onset of the COVID-19 pandemic,EM sovereign high-yield spreads have remained wider than their U.S.counterparts despite what we see as attractive fundamentals.Nov.16Jan.17Mar.17May 17Jul.17Sep.17Nov.17Jan.18Mar.18May 18Jul.18Sep.18Nov.18Jan.19Mar.19May 19Jul.19Sep.19Nov.19Jan.20Mar.20May 20Jul

132、.20Sep.20Nov.20Jan.21Mar.21May 21Jul.21Sep.21Nov.21EM Sovereign High-Yield Spread Minus U.S.High-Yield Spread18|EMERGING MARKETS:A GREAT AWAKENING EM Debt|A Brighter Outlook for EM Debt(continued)first half of the year.We remain strategically overweight high-yielding,frontier-market countries.But we

133、 have recently reduced exposure to high-and medium-beta countries and raised cash levels as we anticipated more appealing valuations to reposition the portfolios in the next few months.We have maintained our exposure to EM corporate credit,where we see generally favorable technical conditions.In par

134、ticular,we have identified several issuers with strong credit profiles that have more attractive spreads than their sovereign counterparts.Our positions are focused on the commodity,consumer,utility,and financial sectors in Latin America;financials and commodities in Central and Eastern Europe,the M

135、iddle East,and Africa;and utilities,financials,industrials,and real estate in Asia.While we prefer hard currency EM debt,we see potential for local currency EM debt to perform well in the latter part of 2022 as the rising growth differential between emerging and developed markets leads to increased

136、capital flows into EM countries.We see opportunities in frontier markets as well as in countries that are likely to be added to benchmarks in 2022,such as Egypt,Ukraine,and India.Lastly,we find attractive several high-beta markets where rates have risen the most and valuations are at very compelling

137、 levels.Virus,Geopolitical Tension,and Chinese Real Estate Loom as Significant Risk FactorsThe COVID-19 pandemic,with the potential for more disruptive variants,has the most potential to cause widespread market volatility.We will continue to monitor policy responses to the virus,along with the resul

138、ting impact on consumer sentiment,industrial production,and economic growth.If the pandemic escalates again because of new vaccine-evading variants,we anticipate that central banks,including the Fed,are likely to pull back on the pace of tapering,and anticipated rate hikes will likely be delayed.As

139、a result,in a situation in which the virus continues to disrupt the global economy,we anticipate that elevated liquidity levels will remain for longer.Geopolitical tensions are a continued threat to global markets.In particular,we are monitoring ongoing tensions between the United States and China,R

140、ussia and Ukraine,and China and Taiwan.The political cycle in EM countries could also have broader effects,particularly with important elections in Latin America that could lead to a populist shift.Lastly,the Chinese real estate sector,which experienced significant volatility in late 2021,could affe

141、ct markets beyond Chinas borders.We expect several issuers to default and/or exercise distressed exchanges given current bond prices.Although the landscape is uncertain,we believe that it will ultimately create significant opportunities for issuer selection within the sector.Opportunities in Hard Cu

142、rrency and Local Currency DebtWe believe that investors should look past near-term headwinds in early 2022 and focus on the fundamental value of EM debt.In this environment,we have a tactical preference for hard currency over local currency debt,as the attractiveness of local markets should remain c

143、louded by a still low growth differential between emerging and developed markets for most of 2022.We also see the potential for increased market volatility in the currency space as the Fed begins its tightening cycle.In our view,hard currency EM debt should provide better volatility-adjusted returns

144、 to investors,especially in the “We have a tactical preference for hard currency over local currency debt.”Marcelo Assalin,CFA,PartnerWILLIAM BLAIR INVESTMENT MANAGEMENT|19China|Opportunities at an Inflection Pointof about 4.7%for the next 15 years.It would start higher and decline,probably toward 3

145、%as we approach 2035 but that is still healthy growth for a$14.5 trillion economy.Clifford:Economic performance has been on track,but there are many conflicting forces behind the scenes.The political agenda is gaining influence relative to technocratic economic policies as top-down policies such as

146、decarbonization and Common Prosperity take precedence.Growth will be sustained into 2022,but export numbers might pull back somewhat as other major economies open up further.How will the Common Prosperity agenda affect economic growth?Vivian:Growth remains a key part of Chinas story,but the governme

147、nt is now more focused on fostering sustainable,broad-based growth.Income and wealth inequality have increased substantially in China in the past several decades,and one of the focuses of Common Prosperity is to change income distribution from a traditional pyramid shape to an oval.Broadening the ba

148、se of economic productivity is necessary to offset some of the structural growth challenges,such as an aging population.Against this backdrop,we are likely to see a shift in the growth mix of the Chinese economy.Previous growth drivers like the digital economy may contribute less.Others,such as high

149、-end manufacturing,semiconductors,and green energy industries,will likely accelerate.Clifford:There has been skepticism about Common Prosperity,but the government is intent on finding a balance between social stability and wealth generation for the broader Chinese population.Another way of implement

150、ing Common Prosperity could be through patient inaction and holding back from conventional policy responses.For example,most people expected“pivotal”government actions to address the recent sell-off in the Chinese property market.So far,there has been none.However,“no policy”is itself a policy.The g

151、overnment may be trying to address a sector where high prices favor the rich and hurt the general population.China is accelerating efforts to achieve Common Prosperity and implementing other policy initiatives aimed at sustainable growth.What will this reshuffling of policy priorities mean for inves

152、tors in 2022 across Chinas equity and bond markets?We asked Vivian Lin Thurston,CFA,a portfolio manager on our Emerging Markets Growth,China A-Shares Growth,China Growth,and Emerging Markets ex China Growth strategies,and Clifford Chi-wai Lau,CFA,a portfolio manager on our EM debt team.How do you vi

153、ew the performance of the Chinese economy in 2021?What is your outlook for 2022?Vivian:Chinas economy was still quite strong in 2021,with consensus for real GDP growth at around 8.5%;this follows 2020s growth of 2.3%,the strongest among major economies.However,we have seen a broad-based slowdown in

154、recent months as a result of COVID-19 Delta and Omicron variants,government environmental controls,and regulation impact.We expect 2022 to be a year of rebalancing in the Chinese economy as the government looks to find a balance between supporting economic growth and accelerating structural reforms

155、and sustainability initiatives,namely Common Prosperity and carbon neutrality.This may lead to decelerating growth around 5.5%in 2022.Overall,we expect macro policies to turn more accommodating in 2022 to support the growth target.President Xis stated goal is to double the size of Chinas GDP by 2035

156、,which equates to average annual real growth Vivian Lin Thurston,CFA,PartnerPORTFOLIO MANAGERClifford Chi-wai Lau,CFAPORTFOLIO MANAGER20|EMERGING MARKETS:A GREAT AWAKENING Clifford:Pork prices,a key inflation driver in China,have decreased in 2021 as pig herds expanded and slaughter rates increased.

157、The big disruptor,however,so far this year has been vegetable prices,as heavy rainfalls in September and October are affecting crop productions.Meanwhile,there is a risk of surging raw materials prices and other elements of todays high PPI passing through to CPI in the second half of 2021.China has

158、had several nationwide and regional lockdowns as a result of COVID-19,which curbed consumer spending and kept demand pressure off CPI.But a big question going forward is how the government will approach COVID-19 in 2022.Will China continue with zero tolerance,or start to learn to live with COVID-19?

159、If there is more opening up,we could see more pressure on consumer prices.What is the inflationary outlook in China?Why is consumer inflation lower than other countries?Vivian:Chinas producer price index(PPI)year-over-year change was 13.5%in October 2021,the highest level in the last 20 years.This s

160、harp increase was driven by rising global commodities prices,structurally reduced supply of manufacturing capacity as a result of supply-side reforms,infrastructure stimulus,and export growth.But Chinas consumer price index(CPI)year-over-year increase in October 2021 was only 1.5%.There are structur

161、al reasons for this huge divergence.China has a strong and growing e-commerce business,which tends to lead to price deflation.Also,Chinese manufacturers have been able to largely absorb PPI pressure despite some margin compression in the near term given the compensation from strong unit volume growt

162、h and improved cost structure.Source:Bloomberg,as of November 2021.EXHIBIT 11Inflation GapChinese Producer and Consumer Prices DivergeDespite a massive spike in producers input costs,consumer price growth in China remained muted in the second half of 2021.Inflation will be an important trigger for t

163、he performance of Chinas markets in 2022.15%10%5%0%-5%-10%Nov.01Jun.02Jan.03Aug.03Mar.04Oct.04May 05Dec.05Jul.06Feb.07Sep.07Apr.08Nov.08Jun.09Jan.10Aug.10Mar.11Oct.11May 12Dec.12Jul.13Feb.14Sep.14Apr.15Nov.15Jun.16Jan.17Aug.17Mar.18Oct.18May 19Dec.19Jul.20Feb.21Sep.21China PPI(Year-Over-Year)China C

164、PI(Year-Over-Year)China|Opportunities at an Inflection Point(continued)WILLIAM BLAIR INVESTMENT MANAGEMENT|21China|Opportunities at an Inflection Point(continued)Source:Bloomberg and William Blair,as of November 2021.P/E ratios are next 12 months(NTM).EXHIBIT 12Relative Valuations for Chinese Equiti

165、es Appear AttractiveAfter pulling back from early 2021 highs,valuations on Chinese equities look relatively attractive compared with U.S.equities heading into 2022.But sectors such as high-end manufacturing and green energy,however,continue to see rich valuations in Chinas equity market.Nov.11Mar.12

166、Jul.12Nov.12Mar.13Jul.13Nov.13Mar.14Jul.14Nov.14Mar.15Jul.15Nov.15Mar.16Jul.16Nov.16Mar.17Jul.17Nov.17Mar.18Jul.18Nov.18Mar.19Jul.19Nov.19Mar.20Jul.20Nov.20Mar.21Jul.21Nov.21MSCI China IndexCSI 300 IndexMSCI China+/-1 Standard DeviationS&P 500 IndexP/E RATIO(NTM):CHINA VERSUS UNITED STATESMSCI China

167、 Index Average25x20 x15x10 x5x0 xrecovery and less demanding valuations.The MSCI China All Shares Index was trading at a 13.5x forward P/E ratio,comparing favorably to the S&P 500 Index,which is around 20 x.But at the sector level,we have seen valuations rise for certain segments,such as high-end ma

168、nufacturing and green energy.Vivian,how favorable do valuations appear in the Chinese equity markets heading into 2022?Vivian:Valuation risk is lower overall than a year ago,which should be supportive for Chinese equities in 2022,everything else equal.Earnings growth was mixed in 2021,with divergenc

169、e between consumer-driven and manufacturing-driven industries;this divergence was exacerbated by policy and regulatory developments.For example,Chinas internet industries experienced both fundamental and policy headwinds in 2021.As a result,the broader Chinese equity index,MSCI China All Shares Inde

170、x,depreciated 13%in U.S.dollar terms in 2021.The domestic China A-Shares index,CSI 300,depreciated 3.5%in renminbi in the same period.We expect overall Chinese equities to fare better in 2022,predicated on earnings “We have seen valuations rise for certain segments,such as high-end manufacturing and

171、 green energy.”Vivian Lin Thurston,CFA,Partner22|EMERGING MARKETS:A GREAT AWAKENING China|Opportunities at an Inflection Point(continued)to go in closing the valuation gap,but investors may need to seriously reevaluate the arbitrage trade of going decidedly long Chinese government bonds if inflation

172、ary risk in China increases like it has in other countries.Clifford,whats your outlook for the Chinese bond market in 2022?Clifford:We expect more balanced,two-way flows to drive the market in 2022.Foreign inflows should continue to be strong because China is still one of the few major economies run

173、ning positive real interest rates.Meanwhile,investors and index providers continue to increasingly recognize Chinese government bonds as a mainstream asset class,through either higher investment allocations or broader index inclusions.On the other hand,interest rates are rising globally amid pent-up

174、 inflationary pressures globally.This has the potential to make Chinese government bonds less attractive than U.S.Treasuries and European bonds from a valuation standpoint.Of course,there is still a long way Source:Bloomberg,as of December 2021.Past performance is not indicative of future results.In

175、dices are unmanaged and do not incur fees or expenses.A direct investment in an unmanaged index is not possible.EXHIBIT 13Strong RMB Drives Bond ReturnsBut For How Long?The strong renminbi has boosted Chinese government bond returns for offshore investors.But a strengthening U.S.dollar and expected

176、slowdown in Chinas export growth could turn tailwinds into headwinds,and make the Chinese bond market much less attractive globally.1041021009896949290888684Jan.20Feb.20Mar.20Apr.20May 20Jun.20Jul.20Aug.20Sep.20Oct.20Nov.20Dec.20Jan.21Feb.21Mar.21Apr.21May 21Jun.21Jul.21Aug.21Sep.21Oct.21Nov.21CFETS

177、 RMB Index“Rising interest rates have the potential to make Chinese government bonds less attractive than U.S.Treasuries and European bonds.”Clifford Chi-wai Lau,CFAWILLIAM BLAIR INVESTMENT MANAGEMENT|23China|Opportunities at an Inflection Point(continued)“Digital technology used to be dominant,and

178、is still important,but hardware-driven technology is a bigger growth story now.”Vivian Lin Thurston,CFA,Partnerbecause they are underpenetrated,and/or there is a big domestic substitution story taking place.For example,certain highly innovative Chinese medical products and devices are much cheaper t

179、han global peers for the same technological efficacy.We also like technology.Digital technology used to be dominant,and is still important,but hardware-driven technology is a bigger growth story now.This includes high-end manufacturing,automation,semiconductors,green energy,electric vehicle batterie

180、s,and the like.We think it will be even more attractive in the future,both from the perspective of industry growth and government support.Given these countervailing pressures,local inflation could determine the fate of the Chinese bond market in 2022.Chinese CPI remains low,and I dont expect inflati

181、on to increase much,at least in the first half of 2022.So I am cautiously optimistic about Chinese government bonds,and I think that current valuations are attractive from both an outright and relative perspective.The renminbi(RMB)is an important risk factor to watch for currency-adjusted bond retur

182、ns.It is strong nowthe CFETS RMB Index was over 102 at the end of 2021,driven by offshore investor inflows,FX(resilience thanks to the governments stable currency policy),and healthy current account positioning(which occurred as travel restrictions prevented leakage from tourism outflows).But a view

183、 of continued RMB strengthening will start to be challenged against a backdrop of a strengthening U.S.dollar and an eventual slowdown in Chinas export growth.Vivian,given the large-scale social and economic rebalancing in China right now,where do you see opportunities in the equity markets?Vivian:Tr

184、aditionally,core investment opportunities in China have been in structurally growing sectors,such as consumer,healthcare,and technology.In our view,that has not changed,although the near-term growth outlook of these sectors such as consumer and healthcare may be impacted by the resurgence of COVID v

185、ariants and the related lockdowns.Some segments have faced material policy headwinds in recent times,but these have largely stabilized.The internet and e-commerce industry remains an important opportunity because the business model is so favorable;plus,recent policy-related concerns have made valuat

186、ions more attractive.We also continue to see opportunities in healthcare,especially in areas such as contract research/manufacturing organizations,innovative drugs,specialty hospitals,non-generic Chinese traditional medicine,and others.These are secular growth areas 24|EMERGING MARKETS:A GREAT AWAKE

187、NING Final TakesMarcelo Assalin,CFA,PartnerHEAD OF EM DEBT We believe EM debt will be challenged in early 2022 by the same virus-related factors and shifts in monetary policy that led to a weakening of the asset class in the latter half of 2021.We anticipate a more positive trajectory for EM debt in

188、 the second half of 2022,however.We believe supportive fundamental and technical conditions,along with attractive valuations,should lead to strong performance for the asset class as 2022 progresses.Olga Bitel,PartnerGLOBAL STRATEGIST We believe 2022 is shaping up to be a year during which economic g

189、rowth and inflation slow toward healthy rates,thereby paving the way to a sustainable,multi-year expansion.Clifford Chi-wai Lau,CFAPORTFOLIO MANAGER,EM DEBT Chinese government bonds should see more volatility in 2022 as a result of pent-up inflationary risk.Meanwhile,the strong U.S.dollar backdrop m

190、akes the relative strength of RMB this year an important risk factor to watch for currency-adjusted bond returns.Todd McClone,CFA,PartnerPORTFOLIO MANAGER,EM EQUITIES Memories of the 2013“Taper Tantrum”loom large for investors,but EM equities are in a starkly different position today.The recent unde

191、rperformance of EM equities,coupled with improvements in their growth prospects and fiscal conditions,should position EMs to weather the headwinds of tightening U.S.monetary policy while benefiting from a broadening of the global economic recovery.Vivian Lin Thurston,CFA,PartnerPORTFOLIO MANAGER,EM

192、AND CHINESE EQUITIES Despite the current transitioning and rebalancing phase the China economy faces,we believe the investment case for Chinese equities remains intact.It is supported by an accelerated shift to domestic consumption and services and broadened technological advancements.About William

193、BlairWilliam Blair is committed to building enduring relationships with our clients and providing expertise and solutions to meet their evolving needs.We work closely with most sophisticated investors globally across institutional and intermediary channels.We are 100%active-employee-owned with broad

194、-based ownership.Our investment teams are solely focused on active management and employ disciplined,analytical research processes across a wide range of strategies.As of December 31,2021,we manage$79.6 billion in assets.We are based in Chicago with resources in New York,London,Zurich,Sydney,Stockho

195、lm,The Hague,and Singapore and dedicated coverage for Canada.Important DisclosuresThis material is provided for information purposes only and is not intended as investment advice,offer,or a recommendation to buy or sell any particular security or product.This material is not intended to substitute a

196、 professional advice on investment in financial products and any investment or strategy mentioned herein may not be appropriate for every investor.Before entering into any transaction each investor should consider the appropriateness of a transaction to his own situation and,the need be,obtain indep

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198、mplete,accurate,comprehensive,or up-to-date and may be subject to change.Data shown does not represent and is not linked to the performance or characteristics of any William Blair product or strategy.Factual information has been taken from sources we believe to be reliable,but its accuracy,completen

199、ess or interpretation cannot be guaranteed.Information and opinions expressed are those of the author and may not reflect the opinions of other investment teams within William Blair.Information is current as of the date appearing in this material only and subject to change without notice.This materi

200、al may include estimates,outlooks,projections and other forward-looking statements.Due to a variety of factors,actual events may differ significantly from those presented.Beta is a quantitative measure of the volatility of a portfolio relative to the overall market,represented by a comparable benchm

201、ark.The Bloomberg U.S.Corporate High Yield Total Return Index covers performance for U.S.high-yield bonds.The CFETS RMB Index measures the value of yuan against a basket of 24 major currencies,with weights based on international trade and has an end-2014 base year.The CSI 300 Index is a free-float w

202、eighted index that consists of 300 A-share stocks listed on the Shanghai or Shenzhen Stock Exchanges.The J.P.Morgan Emerging Market Bond Index Global Diversified(EMBIGD)tracks the total return of U.S.-dollar-denominated debt instruments issued by sovereign and quasi-sovereign entities.(Index informa

203、tion has been obtained from sources believed to be reliable but J.P.Morgan does not warrant its completeness or accuracy.The indices are used with permission.The indices may not be copied,used,or distributed without J.P.Morgans prior written approval.Copyright 2020,J.P.Morgan Chase&Co.All rights res

204、erved.)The MSCI China All Shares Index captures large and mid-cap representation across China A-shares,B-shares,H-shares,Red-chips,P-chips and foreign listings(e.g.ADRs).The index aims to reflect the opportunity set of China share classes listed in Hong Kong,Shanghai,Shenzhen and outside of China;it

205、 is based on the concept of the integrated MSCI China equity universe with China A-shares included.The MSCI China Investable Market Index(IMI)captures large,mid and small cap representation of approximately 99%of the investable equity universe for Chinas mainland market.With 994 constituents,the ind

206、ex includes A,H,B,Red chip and P chip share classes.The MSCI Emerging Markets(EM)Index captures large-and mid-cap representation across 27 EMs.The MSCI Emerging Markets Investable Market Index(IMI)captures large-,mid-and small-cap representation across 27 EMs.The MSCI World Index captures large-and

207、mid-cap representation across 23 developed markets.The Standard&Poors(S&P)500 Index tracks the performance of 500 large companies listed on stock exchanges in the United States.Index performance is provided for illustrative purposes only.Indices are unmanaged and do not incur fees or expenses.A dire

208、ct investment in an unmanaged index is not possible.Past performance is not indicative of future results.Investing involves risks,including the possible loss of principal.Equity securities may decline in value due to both real and perceived general market,economic,and industry conditions.Investing i

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