Emerging-market equities and currencies face the possibility of further declines due to the potential impact of Donald Trump's tariffs, according to UBS Group AG.
The Emerging Markets Risk Appetite Index is currently positioned between neutral and euphoric, despite global growth concerns. Market indicators, such as earnings estimates, currency-hedging costs, and credit default swaps, suggest that the pricing of associated risks remains historically low. This indicates that investors may not be fully prepared for the implications of potential tariff actions, raising concerns about the stability of emerging markets amidst ongoing geopolitical tensions.