Emerging market stocks are increasingly attractive, according to a recent report from UBS analysts, who highlight a more favorable global environment characterized by declining interest rates in the U.S. and expanded stimulus measures in China.
The analysts pointed out that Asian markets, particularly Taiwan, are well-positioned to deliver strong returns, driven by their potential to benefit from the ongoing artificial intelligence boom. Other Asian markets are also expected to gain from more accommodating global monetary policies. Beyond Asia, Latin America and the EMEA region—particularly South Africa—are anticipated to reap rewards from lower interest rates and robust growth in the U.S.
UBS emphasized its continued preference for stocks that adhere to high standards of environmental, social, and governance (ESG) practices, with a particular focus on companies in the telecom and technology sectors.
However, the brokerage cautioned that emerging markets face several risks, including a strong U.S. dollar, rising geopolitical tensions, insufficient stimulus from China, and the potential for a prolonged slowdown in the U.S. economy.
In recent weeks, China has implemented its most aggressive measures to boost economic growth in the world’s second-largest economy. While initial optimism surrounding these initiatives propelled Chinese stocks to two-year highs, concerns regarding the adequacy and timing of the stimulus have led to some market declines.
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