Emerging markets (EM) L/S Equity strategies remain cautious regarding the sustainability of the rally in EM assets, according to the latest Weekly Brief from Lyxor’s Cross Asset Research team.
Managers report that good news tend to be priced in with EM valuations back in their medium range. They are not convinced that global growth bottomed for good. They are also concerned that political uncertainties will continue to make stock picking opportunities vulnerable.
In contrast, EM top-down and credit strategies largely turned bullish on EM markets. Managers report that positive economic surprises in China are only at their beginning. They expect that flows toward EM assets will remain fueled by institutionals and by a wider inclusion of Chinese stocks in MSCI EM indices. They also see the dovish Fed stance as a lasting and powerful catalyst for EM markets.
