BlackRock report points to strong performance of emerging markets

Research from BlackRock Inc. suggests that assets from emerging markets consistently outperform those from developed economies amidst ongoing shifts in global interest rates.

The BlackRock Investment Institute strategists, including Wei Li, highlight local currency debt as a promising asset class spurred by policy changes in developed economies ending their monetary tightening cycles.

Emerging markets have offered returns of more than 4% on local-currency fixed income this year, as per Bloomberg index data.

BlackRock strategists maintain that these markets present some benefits over developed nations, as easing inflation in major emerging markets permits interest rate reductions.

Many financial institutions, including Pacific Investment Management Co, JPMorgan Chase & Co, and Fidelity International, are demonstrating increased interest in local emerging market assets.

This trend comes as many domestic central banks initiate robust measures against inflation, creating intriguing rate dynamics.

The BlackRock research team finds specific appeal in Mexico’s local debt for its quality orientation and Brazil for its high bond yield pass-throughs.

They also suggest that emerging market equities have growth potential, providing more appealing valuations than those from developed economies.

These views are supported by improving political and economic growth prospects in emerging markets, even amidst uncertainties in China’s economic recovery.