18 Jul 2013
Flash: Analyzing attractiveness of EM assets – UBS
FXstreet.com (New York) - The UBS strategist team looks into risk-rewards for negative EM positions that thus far have proven to be less compelling as price has moved.
EM equities under seige
EM equities are now down 8.1% on the year in total return terms, EM local debt is down 5.8%, while hard currency sovereigns are down 6.6%. “It has to be recognized therefore that the risk-reward of a short or an underweight position in EM is less attractive than it used to be.”
Moreover, “It is also relevant that market’s expectations on Fed tightening have moderated somewhat, and that for the first time in a long, long while EM investors across every single asset class are bearish.”
EM equities under seige
EM equities are now down 8.1% on the year in total return terms, EM local debt is down 5.8%, while hard currency sovereigns are down 6.6%. “It has to be recognized therefore that the risk-reward of a short or an underweight position in EM is less attractive than it used to be.”
Moreover, “It is also relevant that market’s expectations on Fed tightening have moderated somewhat, and that for the first time in a long, long while EM investors across every single asset class are bearish.”