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M Stanley: Fed Rate Cut Unlikely to Stimulate Short Term Capital Inflows into Emerging Mkt Sovereign Bond
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Morgan Stanley's view on emerging-market sovereign credit became more cautious, believing that the Fed's interest rate cuts are unlikely to stimulate a large amount of capital inflow into bond funds. Morgan Stanley suggested that investors should go bearish on emerging market sovereign credits in the short term, focusing on placing capital in investment-grade notes over higher-risk debts, and raising cash levels in their investment portfolios. It will take up to 12 months for capital to shift from money market funds to risk assets after the first Fed interest rate cut, according to the report. Spread valuations in developing economies are far from cheap, and the continuous deterioration in fiscal of these countries continued to slow economic growth. China's August data is expected to continue to show weakness. AAStocks Financial News |
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