The global interest-rate environment is once again becoming a key variable for emerging-market (EMs) equities. With US rates staying elevated and the 10-year Treasury yield moving above 5%, global investors have a more attractive alternative in the US fixed income, potentially putting pressure on capital flows towards emerging markets.
Rajesh Palviya, Head of Research at Axis Direct, believes another US rate hike could tighten global financial conditions, strengthen the dollar and accelerate capital outflows from emerging markets.
