EM selloff "storm before the calm" says UBS

|By:, SA News Editor

"We expect emerging market equities to form a base over the next few weeks, and eventually have a better year," says UBS, the team's optimism coming from a belief emerging market economies will generate solid growth in 2014.

Earnings will be key, says UBS, noting EPS growth has collapsed since 2010, but a pickup to low double-digit growth seams feasible this year thanks to better GDP growth, currency weakness, and margin expansion. Trading at 10.1x forward earnings, EM equities are cheap.

Favorite countries: China (FXI), Korea (EWY), Mexico (EWW), Peru (EPU), Hungary (GUR, ESR).

EM ETFs: EEM, VWO, DEM, EDC, DGS, EDZ, EEMV, SCHE, EEB, EDIV, IEMG, DVYE, EEV, EWX, BIK, BKF, PIE, ADRE, HILO, EUM, FNI, EET, GMM, PXH, BBRC, EEMS, EELV, FEMS, DGRE, EEME, EMDD, BICK, DBEM, EMCR, FEM, EWEM, EMBB, EMLB, EVAL, TLTE, EEHB, EGRW, FNDE, EMDG, EMHD, EMSA, EMDR, EMFT, QEM, QDEM