Malaysia led Asian emerging markets higher with a 1.06% overnight gain that buoyed all large-cap stocks. The Philippines was in second place with a 0.9% gain. Real estate developer Ayala and financials were the market leaders. In developed markets, Australia was up 1.26% and the Nikkei up 0.88%, led by miners, smelters, materials and heavy equipment makers.  That’s a big shift from the environment of the past few years, where collapsing real yields in developed bond markets forced investors into equity markets. Poor real economic growth weighed heavily on emerging markets, which underformed consistently during the post-2009 rally.

With all the major world economies surpassing consensus growth forecasts, some of the emerging markets stand to outperform. Commodity producers have outperformed YTD with Brazil in the lead. With China’s strong internal growth, its investment in infrastructure in its periphery, and search for investment opportunities in the Asian region investors should continue to buy emerging markets.