31 Jan 2014
Flash: China concerning - BAML
FXstreet.com (Guatemala) - Strategists at Bank of America Merrill Lynch noted the credit and political concerns in China.
Key quotes
"We highlighted in our Year Ahead piece that 2014 would be a year of relatively low returns for EM. Credit concerns in China, along with political risks flaring up across EM, have triggered dislocations in markets. We examine fundamental value in local markets and external debt."
"Overall, our models suggest that rates are certainly set to adjust upward by an estimated average of around 150bp in EM, as the global cycle normalizes over the next three-to-five years. However, in the shorter term, we find pockets of value, especially in Brazil and South Africa."
"On the external side, EM trades cheap relative to its DM counterparts, implying value relative to potentially stretched High Yield (HY), Investment Grade (IG) and EU periphery spreads."
Key quotes
"We highlighted in our Year Ahead piece that 2014 would be a year of relatively low returns for EM. Credit concerns in China, along with political risks flaring up across EM, have triggered dislocations in markets. We examine fundamental value in local markets and external debt."
"Overall, our models suggest that rates are certainly set to adjust upward by an estimated average of around 150bp in EM, as the global cycle normalizes over the next three-to-five years. However, in the shorter term, we find pockets of value, especially in Brazil and South Africa."
"On the external side, EM trades cheap relative to its DM counterparts, implying value relative to potentially stretched High Yield (HY), Investment Grade (IG) and EU periphery spreads."