Although the MSCI Emerging Markets equity index rallied by nearly 14% from mid-March until late-April, since then it has fallen back by almost 4%, in what appears to be a reversal of previous trends.
MSCI country indices indicate that stock markets in all countries in the EM index save Greece reversed course: if they made gains in the first period, they lost ground in the second, and vice versa. What's more, some of the biggest falls in the past month have come in those stock markets which saw the largest rises during the recent rally, for example, Brazil's and Colombia's.
"Looking ahead, we expect the overall MSCI index to make further gains. Admittedly, we expect the dollar to continue to strengthen, which should make further gains an uphill struggle on a dollar basis. And we forecast 10-year Treasury yields to end the year at 2.50% (vs. 2.16% now). What's more, we think the oil price is more likely to fall than rise over the remainder of this year." said Capital Economics
