Caution with EM equities, look for differentiation among countries – BBH
By FXStreet FXStreet (Córdoba) – According to analysts from Brown Brothers Harriman Emerging Market (EM) equities remain vulnerable and recent bounce should be used to rebalance portfolios.
Key quotes:
“Recent softness in US data and the delayed Fed lift-off have helped EM assets gain some traction in early Q4. We saw similar price action in late Q1/early Q2, but those gains evaporated as the US economy improved and the prospect of Fed lift-off returned. Will history repeat itself? There will be two more US jobs reports before the December 16 FOMC meeting, and we believe there is a risk that the dovish market take on the Fed is premature.”
“Since the biggest risk to EM (the Fed rate hike cycle) still lies ahead, we believe the asset class remains vulnerable to renewed selling. Besides the Fed-related risks, China concerns remain ongoing, potentially weighing on wider EM sentiment. In addition, the recent increase in commodity prices, if sustained, could drive a wedge in the performance of countries within EM.”
“We remain cautious on EM equities as we move into Q4 2015, but differentiation amongst countries could increase.”
“For now, we think investors should make use of this EM bounce to …read more
Source:: FX Street
