Fidelity's Sheikh: EM equities could be the next catch-up trade as China rebounds

Once outcome of US election is known

Emerging market equities could become the next catch-up trade as China’s recovery gains momentum, but the optimal entry point may be after the US election, Fidelity International’s Talib Sheikh said.

The multi-asset income portfolio manager told Investment Week that a weaker US dollar, cheap valuations and improving prospects for Chinese growth could make an allocation to EM stocks attractive over a one-year horizon. The People's Bank of China unveiled a set of monetary stimulus measures in late September, designed to inject confidence in the country's struggling economy, propelling Chinese equities to their best week since 2008. China is now expected to complement the monetary stimulus with fiscal support, although the government has so far held back from providing detailed figur...