EM equities not likely to hit the buffers soon

The MSCI Emerging Markets (EM) Index of equities set another record high on Tuesday, and is some way above its pre-global financial crisis peak. Although the MSCI Brazil Index – the fifth-largest constituent of the overall index – has fallen back since mid-October, we doubt that this signals an imminent end to the rally in the MSCI EM Index. Indeed, we expect it to gain a further 10% or so by end-2018.