Emerging Market Assets, Especially Stocks, Set to Rise in Q4

• Emerging Market Assets, Especially Stocks, Set to Rise in Q4

Emerging market assets, especially equities, are poised to rebound in the fourth quarter from a steep selloff earlier this year, BlackRock said on Tuesday, adding that it favours emerging market hard currency over local currency debt.

“We see room for a recovery, especially in equities,” wrote Richard Turnill, global chief investment strategist at BlackRock Investment Institute, the asset manager’s research arm, citing a resilient Chinese economy and robust emerging market fundamentals.

“Rising risk premia have created value in EM equities, including in the hard-hit tech sector. We prefer selected hard-currency EM debt over the local variety on relative valuations and the insulation they provide against currency depreciations.”

Tightening financial conditions and country-specific shocks had ramped up the pressure on developing nations most exposed to foreign financing needs in recent months.