EMs And Currencies In An Uncertain World: PIMCO

Date: Thursday, December 15, 2011
Author: Brian Bollen's Blog

The latest issue of PIMCO’s Viewpoints, by Ignacio Sosa, is Emerging Markets Bonds and Currencies in an Uncertain World.

Key points include the following.

Even if the global risk environment deteriorates significantly, emerging markets may continue to offer compelling risk-adjusted return characteristics.

Emerging markets external sovereign debt, along with receiving interest rates in higher-quality EM countries, could be the best relative performers in a deteriorating risk scenario.

EM currencies would likely sell off sharply in risk-off periods but would also tend to rebound robustly when risk appetite returns. We believe several Asian currencies are likely to be the best relative performers.

Emerging markets assets remain a risk asset class and will not be immune to waves of global jitters.