• The four major factors behind the decade-long EM rally have evaporated, and show little sign of returning anytime soon. As such, we think a sustainable EM rally will remain elusive. Indeed, the best we can probably hope for in 2016 is stabilization, not a rally. 
  • We could see EM get some limited traction in early 2016 if the Fed is successful in calming markets after it starts tightening. Coupled with the ECB and BOJ QE programs seen continuing well into 2016 (if not longer), EM yields should eventually prove to be attractive.
  • For all EM asset classes, we continue to see divergences across countries. As such, we recommend that investors continue to differentiate.