Morgan Stanley has joined the list of top investment banks that are bullish on emerging markets, reversing a long-held negative outlook for the region. In a striking reversal from there former stance, the US bank says that now is the time to invest in these markets, lead chiefly by China, despite fears that doing so could lead to a recession.
Expansion still the trend
“We believe [global economic] expansion is still intact, with strong consumer trends in developed markets helping to offset the drag of [emerging markets] growth,” said the U.S.-based bank in a recently released report to its investors. Continuing, Morgan Stanley advised investors to view recent market weakness as a “bull-market correction” and that they should “keep the faith [in emerging markets]” as the bank anticipates a strong rebound for equities going into the fourth quarter of 2015.
Commodities such as iron ore, copper, and crude oil have remained largely unchanged since the end of July. This shows that demand still remains strong. The bank has heavily bought into the Indian Rupee and the Mexican Peso. They added that:
The Fed isn't increasing rates today to slow growth or slow inflation, rather they're raising rates to normalise policy. You're likely to not see the same increases in commodity prices," he said.
Morgan-Stanley is still heavily invested into European and Japanese stocks, but they have now turned their attention toward emerging markets. If you want to get in on the action, then visit our Emerging Markets Fund.