BlackRock is ‘underweight’ in emerging market equities due to coronavirus

0
104


Pedestrians walk with umbrellas in front of BlackRock Inc offices in New York, USAScott Eells | Bloomberg | Getty Images

The BlackRock Investment Institute has an “underweight” position in emerging market equities as many of those economies are still grappling with the spread of the coronavirus, a strategist told CNBC on Thursday.Emerging market equities have lagged global equity prices. The MSCI Emerging Markets Index has edged up around 0.4% so far this year – far behind the 5.8% gains in the MSCI World Index over the same period, according to data from Refinitiv.

“Overall, tactically, we remain a little cautious around EMs,” Ben Powell, chief investment strategist for Asia-Pacific at BlackRock Investment Institute, told Squawk Box Asia.

“This is frankly because the virus is still extremely present and the issues related to the challenge of healthcare and the response of economic policy are still not, I’m afraid to say, addressed,” a- he declared.

Emerging markets have reported some of the highest cumulative numbers of coronavirus cases in the world, according to data compiled by Johns Hopkins University. Four of the five countries with the biggest outbreaks – Brazil, India, Russia and Peru – are emerging markets, according to the data.

Led by China, the emerging world is experiencing an earlier and stronger economic recovery than the advanced economies, a development that is not yet ruled out by the market.

But not all emerging markets are doing badly, Powell added. He explained that he had a “clear preference” for China as well as North Asian markets, such as South Korea and Taiwan – major exporters who are benefiting from a revival in the technology cycle. All three markets are part of the MSCI Emerging Markets Index.

Pictet Asset Management has a different point of view. The Swiss investor said in his September outlook that he had moved emerging market equities from “neutral” to “overweight”.

He explained that China, which emerged from the coronavirus epidemic earlier, will lead the economic recovery in emerging markets. These economies have also been more resilient than expected, and the weak US dollar is likely to boost their exports and lower the costs of financing their debt, he added.

“Emerging market equities are well positioned to outperform the majority of their developed peers and therefore we are improving the overweight asset class,” the company said in the report.

“Led by China, the emerging world is experiencing an earlier and stronger economic recovery than the advanced economies, a development that is not yet ignored by the market. “

LEAVE A REPLY

Please enter your comment!
Please enter your name here