Calls to Scoop Up Emerging Market Assets

Emerging market assets have suffered through a brutal selloff, but now the sentiment tide is taking a sharper turn toward the once-shunned segment.  "It's been a tough 12-18 months for emerging markets. We find that positioning in these markets just broadly across the region is at its lowest point in years," Gokul Laroia, co-CEO for Asia Pacific at Morgan Stanley, told CNBC.

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Investors Cast Fresh Eye on Battered Emerging Stocks

Investors are starting to look afresh at emerging equities after years in which the sector has been a consensus "sell".  Barclays, Citi, HSBC, Morgan Stanley and Societe Generale are among banks now advising clients to buy back in - albeit selectively - after a prolonged sell-off that has slashed valuations.  "The timing of that decision will determine people's performance (for the year)," said Fredrik Nerbrand, global head of asset allocation at HSBC, who has a 40 percent portfolio exposure to EM-related assets through hard and local currency debt, commodities and equities.  "When I talk to investors, most people agree with us on a valuation basis, but are concerned about the headline risks that still persist in some emerging markets."

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Igor Purlantov

Fates of ‘Fragile Five’ Diverge

The “fragile five” are going their separate ways.  Seven months after Morgan Stanley coined the term to describe five formerly fast-growing emerging markets seen at risk of an investor flight, their fates are diverging.  The comparison was apt for a while. Brazil, India, Indonesia, South Africa and Turkey all faced high inflation, weakening growth, and growing current-account deficits (essentially the combination a country’s trade balance and investment flows).
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Emerging Markets Turmoil: Quit Overreacting

For years, the market mantra was that emerging markets represented future growth.Lately, however, investors have pulled record levels of capital out of economies from Brazil to India. This is an overreaction; too many investors and analysts are focusing on short-term fluctuations rather than keeping their eye on emerging markets' longer-term prospects.  Though the sell-off has eased, emerging market funds experienced massive outflows soaring to more than $33 billion in the 15 weeks before February, according to Morgan Stanley.

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