Yuma International - Fed Announces It May End Quantitative Easing.
Yuma International: Emerging market equities and bonds are routed as foreign investors scrambled to repatriate funds.
Online, July 15, 2013 (Newswire.com) - Yuma International: The prospect of an end to Federal Reserve's quantitative easing program has prompted a significant repatriation of foreign capital from emerging market bonds and equities.
"The "risk-on" trade may be coming to an end for now. We had billions of dollars of foreign capital looking for a better return than what was available in advanced economies and that drove up bond and equity prices in Asia and Latin America but with skittishness over an end to QE weighing on investors' minds, they're repatriating their money", said an Yuma International EM analyst.
The Asian-based investment manager insists that the emerging markets story is far from over and cites the current outflows of capital as temporary. "This is a knee jerk reaction. At times like this, investors automatically default to panic buying of US dollars and risk assets tend to suffer as a result. There's still a lot of potential in emerging markets and we remain bullish in the long term," concluded the Yuma International EM analyst.
The firm says it still sees plenty of upside in Asian markets and cites Thailand's SET as being a prime example of a bourse that stands to benefit when the furor over Federal Reserve tapering subsides in the weeks and months ahead.
Chairman of the Federal Bank, Ben Bernanke, announced that bond purchases, which have helped to fuel global markets for some time, may be phased out. Bernanke said that the central bank, which currently buys around $85 billion of Treasury and mortgage debt every month, could begin to reduce this, with a target of completely ending all purchases by the middle of next year.