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Emerging markets set for a 'rally' after last year's rout, says strategist


Added 02-11-19 12:02:02am EST - “With the Federal Reserve pledging to be "patient" in future rate hikes, emerging markets could enjoy a turnaround this year, said Mary Nicola, a strategist at Eastspring Investments.” - Cnbc.com

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Posted By TheNewsCommenter: From Cnbc.com: “Emerging markets set for a 'rally' after last year's rout, says strategist”. Below is an excerpt from the article.

With the U.S. Federal Reserve pledging to be "patient" in future rate hikes, emerging markets should do better this year, and may in fact even have "a decent rally," one strategist told CNBC on Monday.

Last year, economic troubles in Argentina and Turkey, as well as the Fed tightening monetary policy, had caused a selloff in several emerging market currencies. Some emerging market stock indexes also saw steep declines. Rising interest rates stateside make it harder for emerging economies to service their U.S-dollar debt.

But those markets should turn around this year, said Mary Nicola, a G-10 foreign exchange and Asian fixed income strategist at Eastspring Investments.

"Now that the Fed is going to be patient, we think that EM has a bit to go. If you look at what we saw last year in terms of emerging markets, the EM rout had much to do with the fact that the Fed was hiking," she told CNBC's "Squawk Box" on Monday. "Now that the Fed hikes are off the table for a little bit, and the Fed can afford to be patient, EM funding conditions won't be as tight as it was before."

"On the back of that, we think that there is scope for EM to have a decent rally. We think that they're really cheap at this point ... and we could see some sort of potential ... as long as the Fed stays on hold," Nicola said.

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