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Multilingual AI-driven EM Outlook

A credit rating upgrade and tax reform in India is propelling local investor sentiment along with an equity market recovery while sentiment in Brazil points to renewed interest in Brazilian assets. The mood is more grim in Colombia on the public policy front while the concern in Poland is over a mounting debt problem in the latest week of sentiment tracking in the EM universe. EMAlpha’sMacro Monitor uses multilingual AI to track the current state of local sentiment in the newsflow across the EM universe. 

Most Positive EM Sentiment 
 
India/Government: The first upgrade of India’s sovereign credit rating in 18 years by S&P Global and the government’s proposed simplified goods and services tax (GST) were a tonic for
investor sentiment over the past week. Equities came back to life and, by Aug. 20, the SENSEX had put in a five-day winning streak. The sentiment for India’s macro themes for Government, Policy Change and GDP tracked by EMAlpha are spiking. S&P bumped India’s long-term rating to ‘BBB’ from ‘BBB-’ and a stable outlook shows confidence in India’s strong economic fundamentals and prudent policy management. The proposed tax change would reduce rates from 12% and 28% to 5% and 18% are intended to stimulate economic growth.

Fig. 1: EMAlpha’s Multilingual AI inspected local Indian media and used local language sentiment analysis to detect sentiment scores for various macro themes. The scores are normalized such that +1.00 signifies extreme optimism and -1.00 signifies extreme pessimism.

Brazil/FDI: An increase in foreign investments, particularly in sectors like logistics and corporate real estate, indicates a renewed interest in Brazilian assets. The recovery of the IFIX index, a real estate index, driven by expectations of controlled inflation and potential interest rate cuts in the U.S., suggests a favorable environment for FDI in Brazil. Recent deals involving state-owned oil company, Petrobras, also contributed. 
 
Thailand/Stock Market: Despite the 19% tariff on Thai exports to the US that is looming, sentiment for Thai Stock Market remains strong (it has been one of the strongest EM signals since early August). The SET 50 Index is up 3% over the past month on optimism over potential stimulus measures and Thai economic growth in the latter half of the year. Lending further support would be a settling of the country’s political and legal turmoil surrounding the Shinawatras (the father/daughter tandem of ex-prime minister Thaksin Shinawatra and current, but suspended, prime minister Paetongtarn Shinawatra). 
 
Most Negative EM Sentiment Signals
 
Colombia/Policy Change: Negative sentiment for public policy seems to be stemming from the need for judicial reforms to enhance transparency and changes in healthcare policy following the allegations of misuse of healthcare funds by a corporate CEO. 
 
Poland/Debt: A continuation of a rising budget deficit in Poland, due to increased defense and infrastructure spending along with repayment of Covid-era stimulus measures, has soured the mood in the market. The deficit through the first seven months of the year already amount to the full year 2025 deficit that had been projected. There is also concern that the budget law will need to be amended, which would have negative impact on the bond market. Of course, the widening deficit has gotten politicized, but it hasn’t had much of an impact on Polish equities, which are up 2.6% over the past month and a gawdy 39% YTD.

Fig. 2: EMAlpha’s Multilingual AI inspected local Polish media and used local language sentiment analysis to detect sentiment scores for various macro themes for the country. The scores are normalized such that +1.00 signifies extreme optimism and -1.00 signifies extreme pessimism.

Global Developed Market Sentiment Highlights: Expectations of more FDI in the US and Japan lead the positive sentiment signals among global developed markets over the past week. In the US, the current transactional nature of trade negotiations is a factor. And, in Japan, the government’s policies to encourage FDI, including tax incentives and regulatory reforms aimed at simplifying the investment process, appear to be the driver. The Canada/Stock Market theme is also getting some love from local market participants as the TSX is up 13% YTD and 20% over the past year, outperforming its southern neighbor. 

For Media Inquiries, contact Brad Durham, [email protected]

Over half of the world’s web content is in languages other than English. Book a demo to discover how the Macro Monitor leverages EMAlpha’s multilingual AI to uncover investable signals in local-language content.

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