Singapore: Amid the euphoria across emerging markets, there are more than a few voices that say it’s time for a pause.
One such is Finisterre Capital LLP, whose $700 million (Dh2.5 billion) Emerging Market Total Return Strategy funds investing in fixed-income securities returned 11 per cent and 12 per cent in 2016 and 2017, respectively. Chief Investment Officer Damien Buchet says the scope to advance further this year is limited as growth in developing economies has reached a mature phase.
“It’s quite striking everyone becomes so positive after we have rallied so much,” said Buchet. “We’re in a less positive part of the cycle than we were two years ago, which doesn’t mean that the next stage is a market crisis but a repricing is probably more accurate.”
The MSCI index of emerging-market currencies and the Bloomberg Barclays measure of local-currency debt of developing nations reached record highs in January amid optimism that growth prospects will outweigh further interest-rate hikes by the Federal Reserve.
Read Goldman Sachs’s contrasting view on emerging-market cycle.
