An overanalysis of geopolitics, “central bank zigzags” and a focus on company earnings are all just distractions when it comes to riding bull markets in emerging stocks.
That’s the view of Bank of America Merrill Lynch, based on an analysis of six previous bull markets in developing-nation equities going back to 1976. The current surge is little different from the ones that came before it and emerging shares could double in two years, according to a note from the Wall Street firm by analysts including Ajay Kapur, head of Asia-Pacific and global emerging-market strategy in Hong Kong.
“We think a substantial overweight in Asia/EM equities is warranted,” they wrote in the note released Thursday. “Let the bull market do its job.”
Emerging-market stocks have rallied around 60 percent since early 2016, but the recent rise amid tension on the Korean peninsula has some investors warning that a correction is due. BofAML, however, said the current bull market is likely to end the same way the last six have, crushed by recession or exhausted by overvaluations.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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