Aberdeen Keeps TRY Shorts, Plans to Add More If Rally Continues
(Bloomberg) -- Aberdeen Asset Management will use any TRY rally to add to existing short positions as lira gains seen short-lived, portfolio manager Viktor Szabo says in interview.
- “If the rally in Turkish lira continues, we would look to add to short positions rather than anything else,” says Szabo
- Lira’s rally “understandable” as market had priced in some chances of Simsek not being reappointed as deputy PM
- Positioning also light, favoring TRY rally while central bank rate cut was in line with expectations
- Investors pleased with Simsek reappointment as they assume that as long as he is there, there won’t be any major deterioration in country’s fiscal balances
- However, Simsek is “basically alone” in new government and it’s unlikely he will have an “easy job”
- While changing the constitution is the main point on the new government’s agenda now, as soon as that’s done focus will move to the economy; pressure on central bank to cut rates more aggressively may increase under the new government, paving way for TRY weakness
- That said, TRY remains a high-yielder currency and its trend will also depend on global environment
- In EM space, Aberdeen likes BRL, Argentina peso and keeps some long RUB after having reduced them a bit; says ZAR remains too volatile and unpredictable given political risk
- NOTE: Aberdeen Asset Management had AUM of GBP290.5b as of Dec. 2015, according to firm’s website
Alert:
HALISTER1Source: BFW (Bloomberg First Word)
Tickers ADN LN (Aberdeen Asset Management PLC)
People Viktor Szabo (Aberdeen Asset Management PLC)
Mehmet Simsek (Republic of Turkey)
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