Emerging markets equities tracked developed markets higher in the first quarter. As momentum built for the $1.9 trillion COVID-19 relief package and vaccinations increased sharply in the US, forecasts for both US and global growth were revised significantly higher.
Lazard AM’s outlook for emerging markets equities remains positive, although interest rates remain a factor to watch. When bond yields rise gradually due to strong growth, emerging markets equities can outperform, particularly traditional value securities. Should yields rise sharply and suddenly, the asset class may weaken, as we witnessed beginning in mid-February.
In emerging markets debt, first quarter performance largely reflected the sharp rise in US Treasury bond yields. What had been a gradual march higher in yields since August 2020 accelerated significantly and ignited a broad-based sell-off in fixed income markets.
Lazard AM maintains a positive secular outlook on emerging markets debt, but they believe the prudent move is to adopt a more conservative stance and patiently await opportunities to add risk at better valuation levels. READ MORE
