02-02-2014
Emerging Markets Correction, Somewhat Overdone
| External debt to GDP in Indonesia is still less than 30% and political risk in Turkey is now widely discounted. At this level of interest rates (and exchange rate) bonds look very attractive in Turkey while most of equity correction in South Korea is due to the indexing of Etfs, as its equity market, despite the country no longer being considered an emerging economy by IMF, is heavily weighted in EM portfolios. We would look for a rebound in those equity markets and a corresponding weakening of yen, now that debate on fiscal budget is up and running. |