Emerging-market stocks are cheap by historical measures and may perform strongly this year thanks to receding risks of economic slowdowns in the U.S. and China, according to HSBC Holdings Plc.

Recent U.S. data have been better than consensus estimates and cooling Chinese inflation may allow authorities there leeway to stimulate the economy should it slow, HSBC strategists John Lomax, Wietse Nijenhuis and Herald van der Linde wrote in an e- mailed report.

Unless the European Union’s debt problems deteriorate they shouldn’t prevent emerging-market equities from rising, the analysts said. They boosted their recommendation for both Chinese and Brazilian equities to “overweight” from “neutral.”

While HSBC is forecasting world gross domestic product growth of 1.9 percent this year, emerging-market “equity valuations appear to be discounting something significantly worse,” the analysts said. “If fear of tail risks lessens, EM equity markets could perform surprisingly well.”