'Investors chasing EM yields in low-rate environment'

The rally in global equities that has taken since the Brexit vote is largely driven by investors who are chasing yields in a low-rate environment, says Geoffrey Dennis, Head of Global Emerging Market Strategy at UBS. "Bond yields are low around the world especially in the US and the UK and hopes are that the Fed is on hold for a long period of time. Therefore, investors are chasing yields and going back into emerging market equities," he said. Terming it as a classical liquidity rally -- one that would be difficult to predict in terms of how long it lasts -- Dennis said Brexit would likely have an economic impact. "That means a further strong liquidity rally in emerging markets will eventually take us to overvalued levels and that is what the risk is," he said.