JP Morgan upgrades Emerging Markets, Miners

Furthermore, during the last four Fed tightening cycles in the US EM had in fact outperformed in three, strategist Mislav Matejka said.

He also upped his recommendation on Miners.

Other favourable tailwinds included a possibly weaker US dollar in the second half of 2017 - particularly against the euro and the yen - and a 'bottoming out' in the growth differential between emerging and developed markets.

As Matejka explained, the spread or difference between US and German interest rates was at a 30-year high and was likely to begin narrowing.

Corporate earnings in EM also appeared to be stabilising and accelerating relative to those in developed markets, Matejka said.

At a price-to-earnings multiple of 12.0, EM equities were also at a 30% discount to DM.

To fund the change in his recommended asset allocation, JP Morgan cut its stance on Japanese stocks from 'Overweight' to 'Neutral', the best performers over the last six months, while doing the same with Technology, which had gained 15% over the past three months.

Worth noting too, JP Morgan believed the yen would rally sharply against the Greenback reaching 105.0.

Matejka also upgraded his view on Miners, the worst performing group last month, from 'Neutral' to 'Outperform', saying that "free cash flow yield is improving and valuations are attractive".

In February, miners lost 12%, he explained, explaining that they were also the second worst performers over the last three months.

He specifically mentioned shares in Rio Tinto, which had fallen 14% in the last month.

"The risks to our EM OW are a spike in USD if a border adjustment tax is introduced, the Fed turning significantly more hawkish, a restart of negative trade rhetoric from the US, or if we get a sharp rollover in activity in China. Within EM, China remains our preferred area, as does Brazil," he said.