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Morgan Stanley — Morgan Stanley Investment Management — Q1 2026 Earnings Presentation
42 slides from Morgan Stanley's earnings presentation, 2026
Slide 1: Emerging Markets Debt Monitor
Emerging Markets Debt Monitor Emerging Markets Investment Team Q1 2026
Slide 2: Important Information and Disclosure
Important Information and Disclosure The views and opinions and/or analysis expressed are those of the author or the investment team as of the date of preparation of this material and are subject to change at any time without notice due to market or economic conditions and may not necessarily come t
Slide 3: Table of Contents
Table of Contents Q1 2026 ROTATING Q2 2026 EM INTEREST EM FX RECAP TOPIC OUTLOOK RATES 4 11 17 20 24 EM SOVEREIGN EM CORPORATE CREDIT CREDIT 28 33 28 33 If you are viewing this book on your computer or tablet, click or tap on the title box to jump to the beginning of each section. Data provided is f
Slide 4: Q1 2026 Recap
Morgan Stanley | investment manacement Q1 2026 Recap
Slide 5: Q1 2026 Recap
Q1 2026 RECAP Q1 2026 Recap • The local and hard currency segments of the market ultimately delivered negative performance for the quarter. Performance was positive in both January and February as EM assets benefited from a weaker U.S. dollar, high real yields, spread tightening, and strong country
Slide 6: Q1 2026 Recap, continued
Q1 2026 RECAP Q1 2026 Recap, continued ASIA • South Korea’s economy was impacted by spillover effects from the Iran war. As a major energy importer and a key player in global manufacturing and semiconductors, the country is highly sensitive to rising input costs and weakening external demand. Curren
Slide 7: EM Corporate Credit – Q1 Update and Outlook
Q1 2026 RECAP EM Corporate Credit – Q1 Update and Outlook HIGHLIGHTS DURING THE QUARTER AND YEAR: The CEMBI index returned -0.21% of total returns for Q1 2026, driven by a -0.52% return from credit spreads, partially offset by returns of 0.31% from US rates. This compares with -2.25% and -1.26% retu
Slide 8: Index Performance Recap
Q1 2026 RECAP Index Performance Recap Q1 2026 3.0% 1.0% -1.0% -3.0% J.P. Morgan GBI-EM J.P. Morgan EMBI J.P. Morgan CEMBI Global Diversified Global Diversified Broad Diversified U.S. Treasury Corporate Credit Spread Sovereign Credit Spread Carry Rates EURUSD FX EurUsd Sovereign Corporate Exchange Cr
Slide 9: Index Performance Recap
Q1 2026 RECAP Index Performance Recap Q1 2026 EurUsd Sovereign Corporate Exchange Credit Credit U.S. Total Index FX Rate Move Rates Carry Spread Spread Treasury Return J.P. Morgan GBI-EM Global Diversified -1.10% -0.31% -2.24% 1.40% — — — -2.25% J.P. Morgan EMBI Global Diversified — — — — -1.27% -0.
Slide 10: Technical: 2025 Flows
Q1 2026 RECAP Technical: 2025 Flows Annual Cumulative Bond Flows • Investors continued to flock to emerging markets debt for the first two US$ billions 40 US$ billions 30.9 months of the year continuing investor trends that started to pick up 20 11.4 momentum in May 2025. 0 6.0 -20 -27.1 • A more ca
Slide 11: Rotating Topic: Iran Update
Morgan Stanley | investment manacement Rotating Topic Iran Update
Slide 12: Pre-War Framework: Variant View and Proactive De-Risking
ROTATING TOPIC Pre-War Framework Variant View and Proactive De-Risking. Our Edge: Information & Process • Direct regional Intelligence o Team members based on Abu Dhabi and D.C. Boots on the ground o Regional exposure and a history of exposure: Ukraine and Israel/Lebanon • Daily Iran monitoring + IR
Slide 13: Escalation Framework: Active Intelligence and Market Movements
ROTATING TOPIC Escalation Framework Active Intelligence and Market Movements What We Were Doing • Do not rely solely on sell-side or public commentary; organize your own information flow and stress-tested narratives in real time. • Use AI tools to synthesize large volumes of notes, calls and local-l
Slide 14: Escalation Framework: Why Hormuz Matters
ROTATING TOPIC Escalation Framework Why Hormuz Matters The Strait Share of global trade (%) passing through the Strait based on • Hormuz carries roughly ¼ of global seaborne oil, ~19% of LNG, and ~38% of crude average flows the week before the war beginning on 28 February. trade—making normalization
Slide 15: Market Reaction
ROTATING TOPIC Market Reaction Market volatility stayed relatively contained rather than a broad macro risk off event. Proximity to conflict and energy supply/demand dynamics drove differentiation between winners and losers. Credit Spread (bps) Changes (2/27 to 3/31) Select Current Account Sensitivi
Slide 16: Looking Forward – Scenarios and Risks
ROTATING TOPIC Looking Forward – Scenarios and Risks Base Case • We expect the conflict to conclude once President Trump declares that core objectives have been achieved • Most military assessments point to a 4–6-week duration as does the U.S. administration. This is driven primarily by political de
Slide 17: Q2 2026 Outlook
Morgan Stanley | investment manacement Q2 2026 Outlook
Slide 18: Q2 2026 Outlook
Q2 2026 OUTLOOK Q2 2026 Outlook MACRO DRIVERS COUNTRY DRIVERS • The U.S. Fed held rates at the January and March meetings. The pause in January • Country level policy responses to the oil supply shocks started to emerge just a raised questions about the pace of future cuts. The March meeting had a m
Slide 19: EMD Risk Factor Dashboard
Q2 2026 OUTLOOK EMD Risk Factor Dashboard Outlook and Summary Moderate Moderate Underweight Underweight Neutral Overweight Overweight Summary We move currencies to neutral. Coming into the Currency year, currencies were supported by the macro backdrop of a weaker USD, but many EM currencies saw vo
Slide 20: EM FX
Morgan Stanley | investment manacement EM FX
Slide 21: EM currencies broadly strengthened in January and February but dipped in March
EM FX EM currencies broadly strengthened in January and February but dipped sharply in March due to geopolitical volatility and U.S. dollar strength. Nominal FX Index Weight: Nominal FX (in GBI-EM Index) has weakened 110.0 significantly since 2018. 100.0 REER Index Weight: But looking at real effect
Slide 22: Pockets of EM currency strength despite March weakness
EM FX Despite general EM currency weakness in March there were pockets strength. Oil exporters with shipping routes outside the Middle East such as Kazakhstan and Colombia saw FX rallies through March while Costa Rica relies primarily on renewable energy sources and imports most of its petroleum fro
Slide 23: EM FX Likes Good Growth and Strong External Balance
EM FX EM FX Likes Good Growth and Strong External Balance % Change in IMF Growth Forecasts (From April 2024 WEO to October 2025 WEO) 5 3 0 Growth forecasts are generally muted -3 compared to a year ago due to the -5 uncertainty of tariffs Current Account % Change as % of GDP (2013 to 2025 Estimates)
Slide 24: EM Interest Rates
EM Interest Rates Emerging Markets Debt Monitor | Q1 2026
Slide 25: Inflation expectations were relatively flat for the quarter
EM INTEREST RATES Inflation expectations were relatively flat for the quarter. In January and February, rate cuts were still occurring albeit at a slower pace. The oil shocks in March could introduce future inflationary pressures. EM Consensus CPI Expectations 1 (% Change YOY) 6.00 5.50 5.00 4.50 4.
Slide 26: A handful of EM countries cut rates during the quarter
EM INTEREST RATES A handful of EM countries cut rates during the quarter but by the end of the quarter cautious and even hawkish rhetoric started to emerge from selective developed and emerging markets central banks. EM Consensus Policy Rate Expectations 1 8.00 7.50 7.00 6.50 6.00 5.50 5.00 4.50 4.0
Slide 27: Real yield differentials notably widened in March
EM INTEREST RATES Real yield differentials notably widened in March as spillover effects from the Iran war put an upward pressure on rates. Emerging markets felt outsized pressure compared to developed markets. EM-DM Real Yields EM-DM Real Yield Differential (Using Inflation Forecasts) (Using Inflat
Slide 28: EM Sovereign Credit
Morgan Stanley | investment manacement EM Sovereign Credit
Slide 29: 5-Year Equal Weight Sovereign Spread
EM SOVEREIGN CREDIT • Spreads selectively widened following 5-Year Equal Weight Sovereign Spread the onset of the war in Iran. bps • Notable bifurcation remains in the 1,000 market and even increased during the period as lower credit-quality countries broadly outperformed higher-credit 800 quality c
Slide 30: Spread levels widened for investment grade and high yield issuers
EM SOVEREIGN CREDIT Spread levels widened for both investment grade and high yield Spreads regionally widened across the investment universe, but the issuers primarily in March. MENA region saw relatively more volatility. 5-Year Equal Weight Sovereign Spread by Region 1,000 250 1,400 200 1,200 800 1
Slide 31: Spreads broadly widened due to idiosyncratic reasons and Iran war spillover
EM SOVEREIGN CREDIT Spreads broadly widened during the quarter due to idiosyncratic reasons and spillover impacts from the Iran war. Senegal’s debt sustainability and reliance on short term borrowing continued to worry investors. Ukrainian spreads widened due to continued volatility from the Russia-
Slide 32: Variance among issuers increased while credit quality bifurcation remained
EM SOVEREIGN CREDIT Variance among issuers increased while the bifurcation based on issuer credit quality remained notable. 5-Year Spreads 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 Underlying individual country spreads are capped at 2,000 bps. Source: Morgan Stanley Investment Management
Slide 33: EM Corporate Credit
Morgan Stanley | investment manacement EM Corporate Credit
Slide 34: Investor Base
EM CORPORATE CREDIT Investor Base EM Corporate Debt Market is Unique Because of its Disparate Buyer Base • The market attracts capital from a diverse mix of Unidentified investors with various mandates from EM sovereign and global corporate strategies to local pension funds and private banks. EM Ext
Slide 35: Our Approach
EM CORPORATE CREDIT Our Approach • We decompose risk premia into three components: US treasury, sovereign-induced corporate credit (SICR), and corporate spread over sovereign spread. • We believe our proprietary SICR method most accurately isolates sovereign credit risk premium from corporate risk.
Slide 36: Valuations
EM CORPORATE CREDIT Valuations Overall, credit spreads remained relatively contained despite geopolitical shocks, with strength in sovereign-linked GCC names and improving prospects in sectors like petrochemicals. Volatility was concentrated in idiosyncratic events (e.g. Brazil corporates), while se
Slide 37: Sector Spread Changes
EM CORPORATE CREDIT Sector Spread Changes The chart below highlights spread moves within the corporate asset class bucketed by country-sector (weighting is in parenthesis) Q1 Top Country-Sector Spread Changes 4,117 Paraguay Consumer (0.01%) 750 Philippines Real Estate (0.2%) 399 Lithuania Infrastruc
Slide 38: Risk Considerations
IMPORTANT ADDITIONAL INFORMATION Risk Considerations RISK CONSIDERATIONS There is no assurance that a Portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the Portfolio will decline and may ther
Slide 39: Risk Considerations
IMPORTANT ADDITIONAL INFORMATION Risk Considerations ABOUT ASSET CLASS COMPARISONS: Credit ratings that may be referenced are based on Moody's, S&P or Fitch, as applicable. Credit ratings are based largely on the rating agency's investment analysis at the time of rating and the rating assigned Eleme
Slide 40: Important Additional Information
IMPORTANT ADDITIONAL INFORMATION The views and opinions and/or analysis expressed are those of the author or the investment team as of The information herein has not been based on a consideration of any individual investor circumstances the date of preparation of this material and are subject to cha
Slide 41: Important Additional Information
IMPORTANT ADDITIONAL INFORMATION This material has been issued by any one or more of the following MIDDLE EAST U.S. entities: Dubai International Financial Centre: This information does not NOT FDIC INSURED | OFFER NO BANK GUARANTEE | MAY EMEA constitute or form part of any offer to issue or sell, o
Slide 42: Important Additional Information
IMPORTANT ADDITIONAL INFORMATION Japan ASIA PACIFIC For professional investors, this material is circulated or distributed Hong Kong: This document has been issued by Morgan Stanley Asia solely for informational purposes. For non-professional investors, this Limited, CE No. AAD291, for use in Hong K
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