Emerging markets are well positioned to stare down a US recession and may even be able to lure investors their way. That’s the message from money managers including JPMorgan Chase & Co. and Deutsche Bank AG even as fears of a contraction in the world’s largest economy spark a dash into Treasuries and other haven assets. Beyond the short-term turbulence, they say, developing nations will be cushioned by cheap valuations, higher yields, faster growth and above all, a resurgent China. That sounds like a tall order given the current scale of losses in emerging markets. Stocks and bonds have been gripped by the sharpest slump since the 1990s, while currencies are suffering their worst losses on record, beating even the Covid rout of 2020. And Argentine assets are set for increased scrutiny following Saturday’s sudden resignation of Economy Minister Martin Guzman. “We may be close to peak pessimism,” said Oliver Harvey, who heads currency research for central and eastern Europe, the Middle East, Africa and Latin America at Deutsche Bank. “There are reasons to think emerging-market performance could hold up better than in past recessions, including very low foreign ownership of local assets, a relatively high starting point for interest rates and cheap valuations.” History shows that mere expectations of US economic trouble spark an early selloff across emerging markets and leave them cheaply valued when the contraction actually arrives. For instance, the US exited the so-called Great Recession only in June 2009, but emerging-market stocks and bonds had bottomed out in October 2008 itself, even before the Federal Reserve started quantitative easing. This time, the selloff in emerging markets began in the first quarter of 2021, a full year before it started in developed markets. “EM assets are cheap relative to history and to their developed-market peers,” Grant Webster, Werner Gey van Pittius and Peter Kent of Ninety-One, wrote in an email. “Current valuations suggest that a mild recession is already priced and that a hard recession — although not our base case — is not far off being priced.” Of all the factors investors say would minimize the impact of a shrinking US economy, none ranks higher than China. They are betting on a rebound in world’s second-biggest economy in the second half as the government gradually eases Covid restrictions and policy makers loosen monetary settings.