Emerging Markets
After a sell-off spurred by the rise in the dollar and U.S. bond yields, many emerging-market risks have jumped back on the radar, Pimco’s Mead said. There are still certain countries that offered opportunities, such as Mexico, yet headwinds remain for markets from trade and geopolitical issues, he said.
Investors began souring on emerging-market bonds and stocks last month, dumping currencies and pulling out of local bonds and equities from Indonesia to Argentina. Local currency bonds have lost 5.5 percent since April 3, compared with a 1.2 percent decline in U.S. Treasuries, data compiled by Bloomberg showed. Emerging-market currencies had the biggest slump in a year on Tuesday.
Here’s what panelists at the summit had to say on the sell-off:
Mead at Pimco:
Some EM currencies such as the Mexican peso still offered opportunities Likes “cross-market” opportunities such as China vs Taiwan Pimco cautious on Malaysia, Turkey and Argentinian assets
Johnson at Vanguard:
“Proper caution and a somewhat defensive posture” Investors need to be wary about volatility and “right-size” the allocation there
Anthony Lawler, co-head of GAM Systematic:
Sell-off is a buying opportunity especially in local currency bonds and equities “The multiples in EM on the equity side are not very rich, and local-debt levels are not worryingly high, so our view is positive on both”
This article was provided by Bloomberg News.