Key insights
- JPMorgan upgraded emerging-market currencies to overweight for H2, favoring higher-yielding and hawkish central bank currencies. They are overweight EMEA and Latin America, underweight Asia. This suggests a potential shift in capital flows towards EM assets, which could indirectly support global risk appetite and potentially benefit US equities by reducing demand for safe-haven assets, though the direct impact is moderate.
Investing.com -- JPMorgan Chase & Co. raised its recommendation on emerging-market currencies to overweight for the second half of the year.
The bank favors higher-yielding currencies and those where central banks are prepared to raise interest rates in response to stronger growth and inflation, strategists including Luis Oganes wrote in a note. The bank also expressed preference for frontier currencies.
JPMorgan is overweight on Latin American and EMEA foreign exchange while maintaining an underweight position on Asia.
The bank upgraded EMEA to overweight and turned positive on the Czech koruna and South African rand.
JPMorgan moved Chile’s peso to overweight but downgraded Brazil’s real to marketweight, citing political noise and a crowded position.
The strategists said their portfolio remains pro-carry but rotates into currencies where central banks are turning hawkish.
JPMorgan maintained its neutral stance on local rates as well as sovereign and corporate credit, saying valuations do not offer clear risk-reward.
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