EM stocks becoming more favorable amid rate cuts, China stimulus- UBS

Investing.com– Emerging market stocks are becoming more favorable amid an improving global environment, UBS analysts said in a recent note, citing lower interest rates in the U.S. and increased stimulus measures in China. 

The brokerage said Asian markets were among those poised to provide the best returns, especially Taiwan, with their potential to capitalize further on the artificial intelligence boom. 

Other Asian markets were likely to benefit from looser global monetary conditions, and outside Asia, Latin America and EMEA- mainly South Africa- were also poised to benefit from lower rates and resilient U.S. growth. 

UBS said it continued to favor stocks with high standards of environmental, social and governance policies, with a focus on telecom and technology names. 

The brokerage warned that risks to emerging markets included a strong dollar, a pick-up in geopolitical tensions, underwhelming stimulus from China and a prolonged slowdown in the U.S. economy. 

China had over the past month unveiled its most aggressive measures yet, aimed at shoring up sluggish growth in the world’s second-largest economy. While optimism over the measures initially helped Chinese stocks hit two-year highs, doubts over their scale and timing sparked some losses in Chinese markets.