The U.S. dollar rally may have sucked the air out of emerging market assets, but funds will return next year, Herald Van Der Linde, HSBC's head of equity strategy for Asia, said on Friday.
"We've got this strong dollar rally; we've got expectations of inflation coming through in the U.S.; we see the U.S. markets rallying. A lot of that money [is flowing] back into the U.S. on very high expectations of the new administration coming in," Van Der Linde told CNBC's "Squawk Box" on Friday. "But what you see is that rally starts to show a little bit of age."
The dollar has surged in the wake of Donald Trump's surprise election win in the U.S. and as the U.S. Federal Reserve surprised markets at its meeting last week by indicating it would likely hike rates three times next year, a faster rate of tightening than the widely expected two times.
That's spurred hefty outflows from emerging markets as a stronger dollar and higher U.S. rates have dimmed the allure of riskier assets in developing countries. In addition, emerging-market companies' ability to service dollar-denominated debt will be dented.