HALISTER1: MS Maintains Positive View on EM Rates, FX and Sovereign Credit

MS Maintains Positive View on EM Rates, FX and Sovereign Credit

(Bloomberg) -- Morgan Stanley maintains constructive view on EM assets as valuations, fundamentals and technicals support its bullish stance, strategists including Gordian Kemen write in note Wednesday.
  • Optimistic despite impending U.S. balance sheet run-off; estimates that an assumed reduction of $180b of UST holdings in first 12 months of run-off will be accompanied by a $15b-20b reduction of EM debt inflows
  • Among sovereign credits, suggests buying Argentina and Ukraine and selling South Africa and Colombia
    • Turns bearish on Brazil and offsets it with bullish position in Russia
  • For local rates, Morgan Stanley is bullish on most high-yielding countries including Mexico, Peru, Indonesia, India and Turkey
    • Among lower-yielders, it is bullish on Poland but bearish on China
  • In currency space, favors countries with healthy external balance sheets, relatively low exposure to risk sentiment, decent carry and light positioning
    • Likes CNY, IDR, INR, MXN, MYR and RUB
    • Doesn’t favor PHP and ZAR
To contact the reporter on this story: Liau Y-Sing in Kuala Lumpur at yliau@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Gordian Kemen (Morgan Stanley & Co LLC)

To de-activate this alert, click here
To modify this alert, click here

UUID: 7947283