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In a survey of 16 investors and analysts, the countries received the best marks in currencies' and bonds' outlook, while China and Turkey were the least favored.
"Countries that represent improving fundamentals and offer high carry are likely to outperform, especially if they are still in the process of cutting interest rates," Jens Nystedt, a money manager at Morgan Stanley Investment Management overseeing $417 billion in assets told Bloomberg.
"Asia, given its lower yields and reflecting increased trade tension, remains vulnerable to higher global interest rates, with China explicitly trying to tighten monetary conditions," Nystedt added.
Carry trade is a strategy that involves borrowing at a low interest rate, usually in the developed economies and re-investing in an asset that provides a higher rate of return, in this case, the emerging markets.
The polled investors, including those from BNP Paribas, Morgan Stanley, and Standard Chartered, expect the Russian ruble to continue appreciating, while the Central Bank is ready to continue slashing the key rate from the current 10 percent per annum. Russia also has the lowest US Fed impact on fund flows, while political risks are among the lowest, investors noted.
The losers in the ratings are China and Turkey. The investors are bearish about Chinese bonds and the yuan, while Turkey's economy is expected to be the weakest among the emerging economies, while political risks remain strongest.
Last week, consulting firm PricewaterhouseCoopers (PwC) predicted the emerging economies will dominate the world by 2050 based on their projected Gross Domestic Product by Purchasing Power Parity (PPP). China and India have been predicted to become bigger than the United States, while Russia is forecast to become the number one economy in Europe.
Russian ruble strengthens to 20-month high
The Russian currency continues its upward surge, trading below 58 rubles against the dollar for the first time since June 2015. This is despite the Central Bank of Russia purchasing dollars to replenish reserves, which often leads to ruble depreciation.
At the opening bell on the Moscow Exchange, the ruble was trading at 57.96 against the dollar and 61.8 against the euro, which is the best for the Russian currency since July 2015.
The ruble has been the world's best-performing currency in the last 12 months, clawing back over 26 percent against the dollar.
Investors have turned bullish on the ruble since the Central Bank announced in February its "capability to cut its key rate [10 percent per annum] in the first half of 2017 has diminished," as it seeks to curb inflation to four percent from the current five percent.
A delay in slashing the key rate is usually an indicator for traders that the ruble will grow or at least not drop.
Last week, the number of long positions on the ruble increased to 17,528 contracts, the highest level since December, according to the US Commodity Futures Trading Commission (CFTC).
The news about the key rate outmatched the negative news that the Central Bank will be purchasing dollars each day until March 6 to replenish Russia's foreign reserves while oil prices are well above the planned $40 per barrel at $55-56. The regulator will have bought $1.9 billion by that date.
On Monday, oil prices were falling with Brent trading 23 cents down at $56.41, while US benchmark WTI was 32 cents down at $53.54.
"Traders will be keenly awaiting the release today of OPEC's monthly report. If production cuts are coming through as suggested, we should see oil prices push higher," ANZ bank said.
OPEC and other producers led by Russia have agreed to prop up oil prices by cutting production by almost 1.8 million barrels per day during the first half of the year to curb a global glut.
OPEC Revises Russian 2017 GDP Growth Forecast Up by 0.1% to 1% - Monthly Report
Russia's economy is expected to continue its turnaround and grow by 1 percent this year, the Organization of the Petroleum Exporting Countries (OPEC) said in its monthly report on Monday.
"An improving oil sector and sound domestic economic developments have lifted Russian economic growth by 0.1 percentage point (pp) so far in 2017," the January report reads.
Last month's OPEC forecast stood at 0.9 percent.
OPEC noted the increase in services sector as well as industrial orders, as well as two subsequent months of rising industrial production by December. The report also mentioned that the country was seeing the lowest inflation rate in five years amid a continued tough monetary policy by the Central Bank and a stronger ruble.
"Further upward revisions are likely in the coming months, given a continuation of the current trend," OPEC said.
The revision comes as Russia emerges from a two-year recession that began amid collapsing commodity prices, including oil, as well as the Western sanctions. In 2016, Russia's economy is estimated to have contracted by 0.5 percent after contracting almost 4 percent the previous year. The first three quarters saw negative growth rates before a slight GDP increase in the fourth quarter. The Economic Development Ministry's 2017 baseline scenario forecast is a GDP increase of 0.6 percent.
Comment: Those anti-Russian sanctions are working well.