The market wobbles since the Brexit vote offered a buy signal for emerging markets (EM) stocks, some analysts said.
And the finger was being pointed squarely at the negative yields on developed markets bonds.
Following the turmoil of the U.K.'s vote to exit the European Union (EU), the combined value of bonds with negative yields jumped to $11.7 trillion, according to a Fitch Ratings report on June 29, marking a 12.5 percent increase since the end of May.
As the Brexit turmoil sent investors fleeing to safe-haven sovereign debt, Japanese bonds maturing in 40 years yielded less than 0.10 percent, while investors paid for the privilege of lending short-term money to Spain and Italy, countries where fiscal profligacy had sparked a crisis only a few years ago.
That made emerging markets equities look good by comparison, analysts said.
"While yields in emerging markets have also come down, they remain considerably higher than anything available in developed markets, and in quite a few cases are rather convincing from a risk-reward perspective," Taimur Baig, chief economist at Deutsche Bank, wrote in a report titled, "Brexit's loss could be EM's gain," on July 1.
"Economies like Brazil, India, Indonesia, and Turkey have their economic, structural, and political issues, but their relative attractiveness is considerable in this negative yield environment," he said.
"These economies will, in all likelihood, deliver higher nominal gross domestic product (GDP) growth rates than their developed market counterparts, which should manifest in higher revenue and profit growth, making a strong case for their equity markets."
That view was echoed by JPMorgan.
"In an emerging market context, you've had commodity stocks absolutely hammered, energy stocks absolutely hammered, exporters absolutely hammered. You have expectations that are very low and market positioning that is very underweight emerging market equities to begin with," James Sullivan, head of Asia-Pacific equities research at JPMorgan, told reporters on June 29. "Then you add into that the overall macro perspective from a rate perspective."
He noted that there were 11 emerging markets where JPMorgan expected significant rate cuts, compared with many developed markets where central banks effectively were no longer able to use interest rates as tools.