Strategic Global Partners says that the commonly held belief that emerging markets will tank in 2014 on Fed tapering could be the worst call of the year.
Tokyo, Japan -- (SBWIRE) -- 01/29/2014 -- Strategic Global Partners have told clients that the general consensus among market analysts and commentators that predicts tanking assets in emerging markets could be looked back on as the “worst call of the year”.
The Tokyo-based asset manager believes that, as the prediction assumes the Federal Reserve will continue to taper its monthly purchases over the course of the year, it is fundamentally flawed.
“Everyone is so convinced that this is the year in which the Fed finally stops printing money but we don’t think that will happen in a straight line. In fact, we expect the Fed to have to hold steady or increase their monthly purchases as and when the yield on the US 10 year note rises through 3% in the months ahead,” said a Strategic Global Partners analyst.
Emerging market stocks have taken a tumble that began last year after the Fed announced that it intended to start scaling back its QE program as the US economy improved. Stock markets in India, Brazil and elsewhere fell as investors in advanced markets reversed the so-called “hunt-for-yield” strategies that had seen them invest in higher-returning assets outside the US and Europe.
Fund outflows may continue over the short term but Strategic Global Partners suggests the possibility of a stall or reversal of the Fed’s tapering could see investors revisiting emerging market assets and driving prices higher once again.
“The thing to remember is that the situation is still very fluid. It never makes sense to follow the herd and with bullishness on US economic potential at its highest for years, we get the impression that something is being overlooked and, consequently, we remain vigilant towards emerging markets,” added the Strategic Global Partners analyst.
About Strategic Global Partners
At Strategic Global Partners we work in conjunction with international private, corporate and institutional investors to provide them with comprehensive financial services, including portfolio management, investment research and trading facilities.
As your strategic advisor, it is our job to identify profitable investment opportunities while concurrently mitigating any risks, as we look to add value to your portfolio and make it more resilient against market volatility.
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