Beaten-down emerging-market stocks will get a boost from an expected policy easing by Chinese authorities and as political risk in the larger economies in the region improves, according to UBS Group AG.
(Bloomberg) — Beaten-down emerging-market stocks will get a boost from an expected policy easing by Chinese authorities and as political risk in the larger economies in the region improves, according to UBS Group AG.
“There is a lot of gloom and doom reflected in valuations of emerging-market equities,” Alejo Czerwonko, chief investment officer for emerging markets in the Americas said in a Bloomberg Television interview. He expects possible policy easing in China and the recent decline in political risk in Mexico, Brazil, Chile and Colombia to support the demand for emerging market stocks.
Czerwonko’s optimism comes as the MSCI emerging-market index is less than 1% away from erasing all its gains so far this year. That’s amid concerns over China’s sputtering growth and as the resilience of US economy spurs expectations that the Federal Reserve may keep rates higher for longer.
Some key takeaways from Czerwonko:
- Likes India as there are secular drivers of performance in terms of economic growth
- Interest rate cuts in Brazil and Chile are historically supportive of equities in those economies, which will also be buoyed by relatively stable political risk
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