October 2, 2018 / 1:03 PM / 10 months ago

BlackRock: Emerging market assets, especially stocks, set to rise in fourth quarter

Share prices are displayed on a board above a emergency exit sign at the stock exchange in Frankfurt, February 3, 2015. REUTERS/Jakob Blumenthal

LONDON (Reuters) - Emerging market assets, especially equities, are poised to rebound in the fourth quarter from a steep selloff earlier this year, BlackRock said on Tuesday, adding that it favors emerging market hard currency over local currency debt.

“We see room for a recovery, especially in equities,” wrote Richard Turnill, global chief investment strategist at BlackRock Investment Institute, the asset manager’s research arm, citing a resilient Chinese economy and robust emerging market fundamentals.

“Rising risk premia have created value in EM equities, including in the hard-hit tech sector. We prefer selected hard-currency EM debt over the local variety on relative valuations and the insulation they provide against currency depreciations.”

Tightening financial conditions and country-specific shocks had ramped up the pressure on developing nations most exposed to foreign financing needs in recent months.

Reporting by Karin Strohecker

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