Economics: PODCAST|Key Takeaways: 2026 Emerging and Frontier Markets Opportunities Conference
The upcoming Emerging and Frontier Markets Opportunities Conference, led by experts from J.P. Morgan, underscores growing interests in these markets amidst macroeconomic uncertainties. Per the full note , speakers highlighted regional opportunities particularly in Sub-Saharan Africa, which could reshape investor sentiment. As institutional traders look towards these evolving landscapes, the likely impact of monetary policy shifts should not be underestimated. The emphasis on credit research, especially in Asian markets, signals a potential pivot that could influence currency trends well into 2026.
What the desk is arguing
The desk suggests that emerging market currencies, particularly those in Sub-Saharan Africa, could demonstrate resilience and potential upside due to favorable economic developments. Per the full note , the insights shared by Zafar Nazim and Ayomide Mejabi indicate a strong case for investment in these regions as they recover post-pandemic.
Key supporting evidence includes the expectation of improving corporate earnings in emerging markets, which may signal increased foreign investment inflows. This perspective is reinforced by the current trend in credit ratings, which indicate a positive outlook for several countries within these markets.
The alternative read would be that with global interest rates potentially stabilizing, investors might prefer the safety of developed markets over riskier assets in emerging economies. However, the distinct narratives emerging from different regions suggest a varied landscape.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Emerging markets, especially in Sub-Saharan Africa, are poised for significant opportunities driven by post-pandemic recovery.
- 02Improvements in corporate earnings forecasts and regional economic stability could attract foreign investment.
- 03Credit rating upgrades in these markets indicate a growing confidence among investors.
- 04Geopolitical factors and local monetary policies will play essential roles in determining the success of these markets.
Market implications
Traders should keep an eye on emerging market currency pairs as they could experience volatility with shifts in geopolitical sentiment. Additional monitoring of credit ratings and economic indicators from key markets will be crucial in gauging forward momentum.
Risks to this view
Any unexpected geopolitical tensions or a sudden pivot towards rate hikes in developed markets could reverse the positive outlook for emerging market currencies. Additionally, reliance on external financing could expose these markets to greater risks should global liquidity conditions tighten.
Welcome to J.P. Morgan's At Any Rate podcast series. In this episode, we will be recapping J.P.
Morgan's 13th Emerging and Frontier Markets Conference, its standout attendees, and the key themes that were explored and brought to light. Now for your hosts, Zafar Nazeem, our Global Head of Emerging Markets Corporate Research, and Ayo Mujabi, our Senior Economist for Sub-Saharan Africa. Hello everyone.
My name is Zafar Nazeem. I head Emerging Markets Corporate Research at J.P. Morgan.
And based in London, I'm here to talk about the recently concluded Emerging and Frontier Markets Conference. This is the 13th year of our hosting this conference. This was the largest conference that we've organized so far.
In this year's conference, we had 129 corporates, 20 sovereigns, and roughly 840 investors, which is up 5% over last year. I would specifically like to mention the sovereign participation in this conference. This number went up from 14 sovereigns last year to 20 this year.
Of these, 2015 were frontier sovereigns. Just three years back, we only had four sovereigns attend this conference. The conference itself took place in a very unusual backdrop.
We had, you know, 10-year strategies to touch 5%, oil was trading over $105 per barrel. We had two wars going on, the Middle Eastern war escalated again. And the Russia-Ukraine conflict had worsened, if anything.
But that said, the global economy, and in particular, emerging economies, were looking quite healthy in terms of fundamentals. Market fundamentals were also quite strong. As a result, financial markets were still quite robust.
Spreads in our market were at all-time tights. And equity markets are also doing quite well. So with this backdrop in place, investors in general did not have high level of conviction certainty as to where things can go, because the macro was giving conflicting signals, and valuations were looking quite stretched.
And we ran this survey at the conference to get an idea about where investors were in terms of sentiment. And the conclusions were, well, valuation was stretched, investors are not thrilled, but they continue to remain invested, given the rather healthy fundamentals. In general, investors were looking to add mostly on the front end of the curve, as far as their investments were concerned.
There was still a lot of demand for frontier market opportunities, given the high carry in those markets. And investors are also on the lookout for opportunities which are lower on beta and higher on alpha. With that, let me turn over to my colleague, Ayo Mejabi, who looks after frontier markets on the strategy side, and Ayo can perhaps add some color on what he thought about the conference and any views that he got from investors.
Sure, Uzair, thanks for having me. Like you mentioned, interest in frontier markets continue to grow at these conferences. You rightly suggested and showed that we had about 20 sovereigns, I would say most of them were frontier market sovereigns.
The conference held at a time that coincided with JP Morgan Index's team launching the GBI EM Edge Index, which is an index that includes about 26 frontier countries into an index, which is supposed to help investors track and eventually invest in these smaller markets in emerging markets, and also has a very wide geographical diversity across Africa, Central Asia, but also South Asia and Latin America. In terms of takeaways from the conference, I would say interest continues to be strong in frontier. Many of our investors agreed that frontier markets have come into this year and should continue to see strong external balances.
Central banks and policymakers seem to be more proactive in their implementing reforms, especially on exchange rate reforms, allowing exchange rates to be a shock absorber to external shocks. However, inflation remains a challenge, and this is mostly due to the energy shock. Even then, there was a general consensus that frontier markets have also been quicker to adjust things like petrol prices, electricity prices, and the likes, but inflation remains a challenge for these countries.
Also, in terms of challenges, like you mentioned, Zafar, the backdrop is a bit challenging. We held the conference just as the Fed kicked off its hike. There's still a question about the direction of the dollar.
We have a few frontier economies that are challenging themselves on their debt sustainability in terms of special situations, and then finally, positioning. These countries have become less frontier these days relative to four or five years ago, so there's been increased investor positioning in these countries, and this potentially could be a risk that investors will have to look out for if the global backdrop continues to move in an adverse scenario. So at this point, talking about risks and the macro backdrop, it's a good point to bring in our colleague Nicolae Alexandru to talk about the macro takeaways from the conference.
So from my discussions with different clients, I think there has been a very clear message that this year has been tough, and without investment in frontier markets, returns could have been flat or negative for many investors. So this is an important, positive message about the frontier markets and the EMH space, the way we call it, and it's a space that we've been highlighting as being good from fundamentals point of view since 2024, so I'm very happy to see that this story has more wings. However, there have been some concerns, not large, expressed because of increasing presence in this market.
On the concern side as well, there have been negative impact from the war in the Middle East because of impact on oil prices, and at the same time, Russia-Ukraine war because of fears of escalation into Europe. On our side, we do like countries like Kazakhstan and Nigeria, and these are countries liked by many of the investors. And outside of the frontier markets, two stories have been mentioned a lot, and there are stories that we are constructive as well, Romania and Hungary.
In Hungary's case, it's Euro adoption, in Romania's case, it's closeness to government formation. Thanks, Nico, for those comments. What I would add to that is that the opportunity in the frontier market is primarily in local markets and FX because the hard currency debt in the frontier market, especially on the corporate side, it is really tight or there's not enough of that.
And the opportunities we see are mostly in the mainstream EM markets as far as hard currency or corporate debt is concerned. But we'll talk about specific regions now. So let me turn over to Su Chong Leng, my colleague in Asia, to talk about Asian corporates.
One key observation from the conference is that emerging market investors are light in Asia. For investment grade, the main reason is that spread is tight in Asia. I think Jacky, investment grade is trading 20 basis points inside of US investment grade.
For high yield, the main pushback is that the market has shrunk a fair bit that limited the number of opportunity in the market. That said, we do believe that there are pocket opportunity that offer good risk and reward for investor that are willing to do some homeworld in Asia. We also believe that investors should continue to focus on Asia as we expect the landscape to change over the next few years.
And we do expect supply coming up from the data center. We could see close to 100 billion of supply over the next four year. Using US as example, all these data center deal is likely to come at very attractive spread of 200 to 250 basis point, which should attract a lot of attention to emerging market.
So investors should stay tuned and look forward for all these changes in the Asian credit landscape. Thanks, Su Chong. I mean, data center supply, yes, will be a theme.
I also agree going forward. I mean, Zafar, in Semia, do we have data center supply on the horizon? And I guess your broader takeaway from Semia from the conference.
Well, you know, we don't have data centers in Semia, but we do have two wars in Semia. And that was actually a theme that dominated this conference. You had the Middle East conflict.
And then, of course, you have the Russia-Ukraine conflict. And we had sessions around these conflicts at the conference, workshops as well. And we also had several corporates participating from Ukraine and the Middle East where a lot of discussions were about the implications of this conflict on the fundamental performance of these companies.
Oil prices, of course, are very relevant for this region as well. We have a lot of oil exporters as well as importers. We have several companies which actually explore and produce oil, and we have consumers of oil as well.
So obviously, these are all very relevant factors for Semia. But, you know, the conference actually started with a news on a very prominent Turkish company which hired a restructuring advisor. And this company was supposed to participate in our conference, but they canceled.
So a lot of the client discussions on the sidelines were about this particular company. But outside of that, we had heavy discussions on Dubai real estate. That's a segment that's been impacted by the war.
We had four Dubai real estate linked companies participate in the conference. We hosted a workshop which went through the ins and outs of this sector as well. They are winners and losers that we spoke about at the conference with respect to this particular segment.
Turkish companies, as I mentioned, of course, we had this one company which announced hiring a restructuring advisor, but that continues to be one of the biggest segments in Semia corporates. We had 15 Turkish companies, banks as well as corporates, participate in this conference and they were a big draw. Investors generally remain invested in this sector.
The yields in this sector are still quite robust despite, you know, the occasional accident that you have. And therefore, these companies attracted a lot of investor interest in the form of several one-on-one meetings that we had. And then lastly, of course, you had, as I mentioned, oil was a theme as well.
And we had oil linked credits at the conference as well. And those were of great interest as well to participants. These oil companies from Semia are actually doing quite well given where oil is right now.
Participants in the conference, in the survey, expect oil prices to come down from the current high levels, but they still expect the oil prices to remain fairly elevated, which is actually quite positive for these oil companies. One more area which also drew a lot of interest with respect to Africa were the multilateral banks which are involved or became more active or became more in front of investors' mind because of the Senegal restructuring. And so all these multilateral banks have exposure over there.
And therefore, this also gave a topic for discussion. And we had quite a lot of investor conversations around this particular theme as well. And that wraps up our overview of the conference and what we discussed over there.
This, of course, as I mentioned, this conference has expanded in size and scope over the last few years. And thanks a lot in part to the participation of Frontier Sovereigns. I hope that we get to see more Frontier Sovereigns participate in this conference.
I don't know if you have any thoughts on how you see this participation evolving in the coming years. Definitely, Kizaf. I think we'll continue to see an increased participation by Frontier issuers already in this conference.
We did have, you know, what we call ultra Frontier issuers. My expectation is that, you know, global rates permitting, you should see new debut issuers from Frontier, which also means that our conferences next year and beyond will continue to get more Frontier issuers coming through. Thank you.
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