Laszlo Birinyi, the president of Birinyi Associates, said investors need to stay away from emerging markets, CNBC reported.
While the rally in the stock market may see another run up, emerging markets should be avoided, Birinyi told CNBC.
He predicts that the Dow Jones Industrial Average will hit 11,000 by the end of December.
“There’s still an awful lot of liquidity. That’s why you see these rallies after a piece of bad news: because too much money is sitting on the sidelines,” he said.
Emerging markets are risky right now, he said.
“Rules and regulations are different and the markets are not necessarily as transparent as ours are,” he said. “And for individual investors who are not on top of this day in and day out, I think it’s probably not the best place to go.”
Since emerging markets are led by commodities and a flow of funds, he believes oil, gold and silver prices will increase even more, Birinyi said.
Emerging equities have risen this week despite the debt crisis in Dubai, Reuters reported.
“Dubai has been a stress test for global markets and that seems to have been passed for now,' said Namik Aksel who manages $1 billion in Turkish equities. “Risk appetite is still there. The Dubai news was an interruption but in Turkey I am seeing funds putting on positions again.
Analysts said Greece and the Ukraine still face a myriad of problems with high levels of debt, Reuters reported.
“All this is a reminder that though the extraordinary stimulus policies and liquidity have helped markets to rally almost continuously for the past half year it doesn't mean the underlying problems of overleveraged lenders and borrowers have gone away,” said Mats Olausson, head of emerging markets research at SEB in Stockholm.
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