UBS upgrades emerging markets equities

UBS has upgraded emerging market equities to the most preferred in their portfolio, citing a positive outlook for global growth and the potential benefits of rising commodity prices, particularly in the energy sector. Michael, a representative from UBS, shared insights on the firm's decision to favor emerging markets in a recent interview on CNBC Africa. Despite some near-term challenges, UBS believes that the overall landscape for emerging market assets is favorable. The central bank's continued support for risk-taking and the relative attractiveness of emerging market equities make them a compelling investment opportunity for the year. Additionally, UBS highlighted specific regions within the emerging markets that present promising opportunities. The firm sees potential in Asian markets, particularly in tech themes, as well as in China's robust domestic consumption story. Furthermore, UBS identified Latin America and Russia as markets with favorable prospects. In terms of sector preferences, UBS pointed to value, energy, financials, and industrial names as areas of interest for potential growth. The firm also highlighted its overweight position in the EM credit space, particularly in dollar-denominated sovereign bonds. Despite concerns about South Africa's fiscal metrics and potential downgrade risks, UBS remains cautiously optimistic about the country's market. While acknowledging the need for reforms and improved growth prospects, UBS sees merit in South Africa's institutional confidence and market liquidity. Looking ahead, UBS emphasized the importance of addressing critical questions to sustain long-term investor interest in South Africa. Overall, UBS's upgrade of emerging market equities reflects a strategic shift towards positioning for global growth and capitalizing on unique opportunities within the evolving market landscape.