Morgan Stanley is strongly optimistic about emerging markets, saying that the Fed's interest rate cut and the lower dollar will open the door for emerging market stocks to outperform US stocks.

According to a Bloomberg report on Wednesday, Jitania Kandhari, Deputy Investment Director of Emerging Markets and head of macroeconomic research at Morgan Stanley, said that US economic growth and high interest rates were previously beneficial to the US dollar, but now these two major factors have peaked and are beginning to benefit markets outside the US. “The overall macro fundamentals of the emerging market look good.”

Kandhari insisted that this decade was a “decade for emerging markets,” even if the performance was not as good as expected at times.

As of September 23, the MSCI Emerging Markets Index has risen 11% so far this year, falling behind the S&P 500 index for the sixth year in a row, which has risen more than 20% this year.

“I continue to be constructive,” Kandhari said. “I think emerging markets are the asset class that will perform best this decade.”

Kandhari said that previously, due to the faster tightening of policies by the Federal Reserve, interest spreads between the US and other countries were beneficial to the US dollar. A series of fiscal policies introduced by the federal government stimulated the rapid growth of the US economy, which was also beneficial to the US dollar. Kandhari believes that a 10-year US Treasury yield of 4% is a reasonable level, which “is a very good environment for emerging market assets.”

Kandhari also said that after the Federal Reserve cuts interest rates, those emerging market central banks, which until now have only been on the sidelines, will be less constrained in cutting interest rates.

The Wall Street News article mentioned that the Federal Reserve cut interest rates for the first time in four years, sending an easing signal to central banks in emerging markets, and the outlook for the Southeast Asian market is optimistic. Over the past two months, fund managers have continued to increase their holdings of Thai, Indonesian and Malaysian sovereign bonds. And for three months, they have been net buyers of Indonesian, Malaysian, and Philippine stocks.

Meanwhile, due to the optimistic economic outlook and interest rate cuts by the Federal Reserve, foreign resources continued to pour into the Indian stock market. The benchmark stock index Nifty 50 index once broke through the 26,000 mark on Tuesday, reaching another record high.