Flash: EM hard currency preferred – UBS

The UBS strategist team looks into the merits of hard currency vs. asset classes for EM positions.
Bearishness prevails
“While we recognize that the price has changed, we can’t objectively say we have spotted signs, which will make us go the other way. Investors are very bearish in their minds, but not necessarily on their books. Moreover there could hardly be a more positive global setting for EM; it may not stay this way, and the slowdown in EM has been in place for some time, but leading indicators don’t yet point to an early cycle recovery.”
We would point interested readers to a recent note, ‘What changes our cautious view on EM?’ While EM needs to search for a robust post crisis growth model, its credit worthiness has not deteriorated significantly. For this reason we prefer EM hard currency debt against other EM asset classes on a 6m view.”