UBS: Beware Emerging Markets in a risk-off environment

UBS: Beware Emerging Markets in a risk-off environment. In the weekly Antipodean publication UBS discusses EM and whether now is a good time to dip the toe back in. After being out of favour since early last year, some investors are beginning to tentatively move back into emerging markets. This has been reflected in a rebound in emerging market equity performance recently. The broad MSCI EM index is up 5.5% since mid-March compared to a rise of just 1% for the developed market index. After a record 22 consecutive weeks of equity outflow, sentiment is tentatively turning more positive. Is it time to take a closer look? From a broader perspective, we need to see clearer evidence of an improvement in the global cyclical recovery. The main concern here is that in a global risk-off sentiment-driven environment, emerging market equities in general will underperform developed markets.