The one-month long rebound in emerging-market assets is poised to reverse, according to Bhanu Baweja, a UBS Group AG strategist, who correctly called this year’s rout.
While expectations for more monetary easing from global central banks have helped stabilise developing-nation stocks and currencies in the past month, weakness in exports and commodity prices as well as higher debt repayments will keep the assets under pressure, said Baweja, USB’s head of emerging-market cross asset strategy in London.
“Today EM sentiment is taking a break from perceived extreme negativity,” Baweja wrote in a note Tuesday. “However, fundamentals are still slowly worsening.”
South Africa’s rand, the Indonesian rupiah, Malaysia’s ringgit and the Columbian peso will lead the renewed decline “before long,” while emerging-market stocks will start underperforming their peers in advanced economies again, he said.
A Bloomberg gauge of emerging-market currencies has risen 2.3% from the record low set in late September while the MSCI Emerging Markets Index of stocks advanced 11% from a six-year bottom reached in August. The respite came amid speculation the Federal Reserve will refrain from raising interest rates this year while Chinese policy makers lowered borrowing costs.
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While expectations for more monetary easing from global central banks have helped stabilise developing-nation stocks and currencies in the past month, weakness in exports and commodity prices as well as higher debt repayments will keep the assets under pressure, said Baweja, USB’s head of emerging-market cross asset strategy in London.
“Today EM sentiment is taking a break from perceived extreme negativity,” Baweja wrote in a note Tuesday. “However, fundamentals are still slowly worsening.”
South Africa’s rand, the Indonesian rupiah, Malaysia’s ringgit and the Columbian peso will lead the renewed decline “before long,” while emerging-market stocks will start underperforming their peers in advanced economies again, he said.
A Bloomberg gauge of emerging-market currencies has risen 2.3% from the record low set in late September while the MSCI Emerging Markets Index of stocks advanced 11% from a six-year bottom reached in August. The respite came amid speculation the Federal Reserve will refrain from raising interest rates this year while Chinese policy makers lowered borrowing costs.
Click Here To Register For Free Trial Services OR Give A Missed Call : +6531581402 Follow Us On Twitter : www.twitter.com/epicresearchsg Like Us On Facebook : www.facebook.com/EpicResearchSingapore Need Any Assistance Feel Free To Mail Us at : info@epicresearch.sg
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