The dilemma facing emerging market investors

With the initial recovery rally likely peaking, is it time for some reshuffling in emerging markets?

Global economic growth is rebounding strongly. China has already completed its V-shaped recovery. The United States is now seeing the strength in the recovery come through and is well advanced in the upward leg of its V-shaped recovery. Meanwhile, Europe is only a few months behind the US and emerging markets (EM) ex north Asia will likely reach their strongest point in the recovery in Q4 of this year.

This is all positive but is now largely anticipated by markets. And it has been reflected in the strong performance of the most macroeconomically sensitive or cyclical stocks so far this year, both in emerging and developed markets. This raises the question, what could drive continued strength in cyclical and value areas of the market?

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