From Barron's Emerging Markets Daily (Jan. 31)
Emerging-market stocks and currencies extended their slide on Friday,
with broad sector indexes on track to generate their worst monthly
results in close to two years and their worst January since the
financial collapse in 2008.
But UBS views the capital flight out of emerging markets amid talk of a contagion effect as a “storm before the calm.” In a research report, the Swiss bank predicts 10% upside in emerging-markets equities for 2014.
“Despite recent market turbulence and policy responses … we expect EM equities to form a base over the next few weeks
and, eventually, have a better year in 2014.” Nonetheless, the bank’s
global strategy team retains a small Underweight in emerging-markets
stocks because of greater upside and less volatility in developed
markets.
At the heart of UBS’s optimism is a
belief that emerging markets will generate solid economic growth this
year “despite recent events.”...MORE
