HSBC’s latest emerging markets (EMs) sentiment survey, published in January, suggested that investors became much more upbeat on EM currencies in the last quarter of 2020.
Various factors have contributed to this tilt towards long exposures, including higher commodity prices and improving economic activity globally.
However, while positive sentiment towards EM currencies is justified in the medium term, this is not necessarily the case in the near future due to a lack of visibility around vaccination programmes, not only in Latin America but also across Asia, suggests Daniel Tenengauzer, BNY Mellon Markets’ head of markets strategy.
Our long-term valuation models still point to EM FX being cheap against external drivers
Christian Wietoska, Deutsche Bank
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