The macroeconomic outlook of the region looks more challenging from a policy point of view in 2017. EM assets recover ground after reaction to US election outcome/Italian referendum proves short-lived. Market volatility is likely to rise early next year on uncertainty over the implementation of Trump’s fiscal loosening policies and a cramped political events calendar in Europe. However, investors’ hunt for yield and improved fundamentals compared to the 2013 taper tantrum will likely assist EM assets to withstand well any new bouts of risk aversion, with large scale selloffs likely to offer attractive entry levels.
A more challenging year for the region in 2017
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