Here's a quick recap and what to look forward to in Q2:
[caption id="attachment_69704" align="alignright" width="300"
caption="If emerging markets are to outperform next quarter, China
will be the key"]
Fund flows into emerging markets (
) clearly have taken a slight detour. After a staggering run of 24
straight weeks, we are now seeing net outflows -- 1.6Bn last week
out is the largest since Sept 2012 -- but nothing major.
will always show the marginal dollar allocation and clearly EM is
out of favor relative to DM. But, we know that and we have
discussed this trend ad nauseum; so, this may be the opportunity.
Equities in Q2 will not take their lead from the US, but rather,
the EU and China (
). If you are an EM player, you need China to rally to see a
proper, sustainable rally. Growth in G3-US is the key to any
Meanwhile volatility is likely to rise in Q2, and should be
traded hard if you are in high quality names. Invest with
confidence on the dips if you have the conviction of your work to