Welcome to Thoughts in the Market.

I'm Andrew Sheets, Chief Cross-Asset Stragist for Morgan Stanley, and I'm Daniel Blake,

Equity Straddisk covering Asia and Emerging Markets.

And on this special edition of the podcast, we'll be discussing equity markets across

Asia and emerging markets, and how investors can view the regions in light of an ongoing

recovery.

It's Thursday, March 25th, at 12 p.m. in London, and its IPM here in Hong Kong.

So Daniel, it's safe to say that emerging market equities have been a pretty popular

asset class.

We've seen record inflows into exchange-traded funds for emerging market equities, and a

lot of that positive sentiment to start the year was based around this thesis that the

global economy is recovering, and emerging markets are very well positioned to benefit

from that economic recovery.

And yet, it's safe to say that year to date, the road's been a lot rockier.

So what do you think has been going on in emerging market equities, and why have you and

your team been a little bit more cautious on the outlook than many other investors?

So as regular listeners, we'll know we've been discussing our relatively cautious fuel

in E.M. and I would highlight that the concerns we have include the divergence on the policy

cycle.

As China slows its credit and property sectors to manage leverage risks.

And we've also started to see several high beta emerging markets starting to hike rates

out of the pressure from higher interest rates coming out of the bond markets in the

...