BlackRock Shifts Stance on Emerging Markets, Backs Euro Government Bonds
BlackRock Investment Institute Mid-Year Outlook Highlights
June 30 (Reuters) - The BlackRock Investment Institute (BII) said on Tuesday it had become less bullish on the outlook for emerging market stocks and hard-currency debt, but more upbeat on the outlook for euro zone government bonds.
Here are the main points from the mid-year outlook of the BII, an arm of U.S.-based investment firm BlackRock that provides proprietary investment research:
Emerging Market Equities
Shift to Neutral Stance
• BII moved its overall stance on emerging market equities to a 'neutral' position from a small 'overweight'. The firm said it saw "opportunities where the AI buildout drives demand for infrastructure, particularly in Latin America."
Emerging Market Debt
Hard-Currency Debt
Risk-Reward Profile Assessment
• On emerging market hard currency, BII also moved to neutral from a small overweight, noting that fundamentals have improved, but pointed to a "more attractive risk-reward profile" in emerging market local currency debt.
Local Currency Debt
Upgraded to Small Overweight
• It swapped its neutral stance on emerging market local debt to a small overweight. "We like the yield relative to its volatility and improving fundamentals."
Euro Zone Government Bonds
Increased Optimism and Overweight Stance
• Outside emerging economies, the BII upped its stance on euro zone government bonds from neutral to overweight. "We are overweight short- and medium-term bonds. Markets are pricing restrictive policy rates of about 3% for several years. We think that’s overdone."
(Reporting by Karin Strohecker. Editing by Mark Potter)
