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The Fight for Yield Has Crept Into Emerging Market Equities

Low government bond yields in developed markets mean more demand for emerging market equities, according to UBS AG analysts.
A cashier counts rand banknotes at the check out counter of a store in the Hatfield Plaza shopping center in Pretoria, South Africa
Photographer: Waldo Swiegers/Bloomberg

A global fight for yield has boosted the appeal of dividend-juicy stocks around the world.

What's surprising is where developed-market investors are now staging this battle — in emerging market stocks — and the justification that's involved: low bond yields in their usual domain.  

"Investors are switching into EM stocks for yield 'income' given a lack of bond income in developed markets," UBS AG analysts led by Geoff Dennis write in a report published on Tuesday.