27 Jun 2013
Flash: Re-balancing - Societe Generale
FXstreet.com (London) - Kit Juckes, Global Head of Currency Strategy at Societe Generale said month-end position-adjustment and portfolio re-balancing will probably dominate.
He sugest that in the next few days this will be the case and that makes any bounce in emerging markets, in particular, likely to be short-lived. He suggested that outflows from EM funds, the inability of holders of EM equities and local market debt to do more than use FX as a proxy hedge, suggest that there is a fair amount of volatility ahead, and a lot of risk, too. He see’s that credit, following equities, may see a better bounce, but there too, the lack of liquidity in the sell-off is a source of concern to anyone with a large portfolio.
He sugest that in the next few days this will be the case and that makes any bounce in emerging markets, in particular, likely to be short-lived. He suggested that outflows from EM funds, the inability of holders of EM equities and local market debt to do more than use FX as a proxy hedge, suggest that there is a fair amount of volatility ahead, and a lot of risk, too. He see’s that credit, following equities, may see a better bounce, but there too, the lack of liquidity in the sell-off is a source of concern to anyone with a large portfolio.