Emerging Markets: It ain't over till the fat lady sings

Wed, Feb 28 2007, 09:51 GMT
by Thomas Harr, Lars Christensen

The Emerging Markets’ sell-off has continued overnight and it is still far too early to say that this is over
It should be noted that there has not been any significant policy or macro economic trigger behind the sell-off in Emerging Markets
...it is simply a matter of too many Emerging Markets assets being too expensive and overvalued
Therefore the sell-off could persist for some time to come
The extent and length of the sell-off is hard to predict, but this could be the initial phase of a sell-off and we therefore clearly recommend to reduce exposure to Emerging Markets - particular in high-beta/high-carry markets like Turkey and Brazil and Central and Eastern Europe. Emerging Asian FX markets look like the only safe haven in Asia and even here exposure to the high-yielders should be reduced.

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Published On Wed, Feb 28 2007, 09:52 GMT

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