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Thursday, 27 March 2014

PIMCO: No Fears Emerging Markets???

World's top fund manager: relax about emerging markets

By Frik Els 

Francesc Balcells and Anton Dombrovsky of PIMCO, the world's largest money manager with an eye-watering $2 trillion in assets across its various funds, on Tuesday provided insights into the state of emerging markets.
More specifically, the authors ask: With troubles in Ukraine, Turkey, Argentina, Egypt, Thailand, China and elsewhere are we headed into a 1997–1998 style emerging market meltdown?
The current turmoil is not unprecedented: "Every time the Fed has removed monetary accommodation in the past, it has been followed by some form of emerging market turbulence," argues Balcells.
The same scenario played out in the early 1980s and mid-1990s, and again in the early 2000s.
There is something different this time around however: "The increased importance of growth in China to other emerging markets has introduced a new phenomenon: For the first time, a recovery in the developed markets, albeit tepid and not uniform, is not spurring a recovery in emerging markets."
Q: Should investors expect a repetition of an emerging-market-wide crisis? And if not, why?

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While more scientific thinking point to big troubles Soon!

In the end we take the side of science and logic. These countries are basket-cases and there is no hope that they will ever recover as there just won't be the energy and material available to pump into these marginal economies. Start looking for the higher ground.

Investors' Insights
March 27, 2014

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