EM Down 5% Since China Surprise

By Emerging Money>,

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EM down 5% since the surprise China PMI contracting print. china map flag This was a 6m low for China manufacturing and reinforced that China's 4Q slowdown was more than seasonal.

  • Investors were caught off guard by Chinas contracting PMI (6month low) combined with US vol and price dip.
  • EM selling off as rates go lower is a surprise and caused greater consternation but we are not in EM crisis of yesteryear despite sentiment being as bad:
    • EM doesn't have dollar debt like before (maybe Turkey)
    • But FX could get worse and as equity investor in EM this is always at least half of your return profile (and why there is a huge positive opportunity - but not yet)
    • EM debt still crowded but not as retail oriented
    • Indonesia, Brazil and Turkey all at some point have a backstop in that there is a real yield baseline now that makes these places interesting to invest sg2014012442068 sg2014012442004

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Stocks
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