BlackRock upgraded emerging market stocks to overweight as they anticipate a more stable US dollar, low interest rates, and a positive outlook for further growth.
"The most important part and what drives our [view on] the EM performance over the long term is the fundamentals, but you need to be aware of the sentiment around EM. Now both of them have aligned," said Gerardo Rodriguez, portfolio manager of the BlackRock Total Emerging Markets Fund.
Rodriguez noted the stability with a slowdown in China's economy, steady commodity prices, and positive US economic outlook.
The 'lower-for-longer' rate outlook reduces the risk of a sharply rising U.S. dollar, expands the scope for EM rate cuts (25 so far this year), and makes high-yielding EM assets relatively attractive," said analysts at the firm.
Read more at CNBC.