Morgan Stanley recommends " buy on dips" in emerging markets.

Morgan Stanley strategists said that President Trump's nomination of Kevin Warsh to lead the Federal Reserve does not mean that the year-long rally in emerging market currencies and local bond markets is over. Despite a 0.5% drop in the MSCI Emerging Markets Currency Index since last Thursday's close, investors should still buy on dips in the local markets because the fundamentals remain strong and monetary policy continues to provide support. "The emerging market bull market may still be intact," wrote strategists James Lord and Simon Waever in a report. The late-week price action "may have been magnified by investors caught off guard and wrong-footed in currency market positioning." "Buying on dips is a wise move, with more compelling reasons to buy in emerging markets than with the Federal Reserve." Morgan Stanley expects the Fed to resume rate cuts in June. Colombia's rate hike last Friday "is the latest example of emerging market central banks taking actions to support their currencies."