The 2020 outlook for Emerging Markets equity is brightening. After a prolonged earnings recession from 2011-2015, Emerging Markets staged a recovery in 2016 and 2017, only for it to be interrupted in 2018. In our 2019 outlook, we expected the recovery to be reinstated and for Emerging Markets to deliver strong absolute performance and to outperform developed markets. While Emerging Markets bore the brunt of elevated geopolitical protectionism that exacerbated a global economic slowdown, the rally towards year-end led the MSCI Emerging Markets to return 18.4%. This was comparable to Europe and Japan, although lagged the US, which saw its best return since 2013. Over 2020, we expect the modest cyclical rebound that commenced for Emerging Markets in Q3 2019 to continue and to support equity returns. Whether the recovery ‘green shoots’ broaden and flourish relies primarily on improvement in Sino-US relations. In turn, this would trigger greater capital investment, improve the transmission of ample USD liquidity to real economies and boost corporate earnings. The principal risks emanate from developed markets due to a combination of overvalued markets, fading growth prospects, inadequate policy options and rising populism. Over 2020, an active investment approach that can respond to diverging scenarios looks best placed to generate sustained performance for investors.