Emerging market (EM) stocks touched a new three-year high on Wednesday as uncertainty over ECB stimulus measures prompts investors to switch out of Europe in favor of EM equities.
The MSCI emerging equities index gained 0.3 percent, extending gains made earlier in the week to reach a new three-year high, fueled by a rise in external demand, analysts have said.
The boost in EM equities has been bolstered by an asset allocation shift away from Europe, following five months of emerging market outperformance versus their developed market counterparts as sentiment and fundamentals in the region improve.
“Emerging market equities, still on a relative basis are cheap compared to developed market equities and secondly they are still underowned. While we are seeing flows go in, I still think particularly from European investors we can see more money going in to reallocate to EM equities,” chief investment strategist at iShares EMEA, Stephen Cohen said.