Global Investing

Ask the audience

No sign at a Fitch Ratings briefing today that things will get much better this year for emerging market debt. The 100 or so mainly industry attendees were asked to give their thoughts using a machine not unlike the “Ask the Audience” gadget seen on “Who Wants to be a Millionaire”.

Only 10 percent said credit quality would improve over the next 12 months. By far the largest vote — 59 percent — was for credit quality to “deteriorate” somewhat.

 As for a wholesale crisis on emerging markets, the attendees were fairly sceptical. Only 12 percent thought there was a more than 50 percent chance of such event. Half the respondents said the odds were between 20 and 49 percent. SOme 38 percent said it was less than that.

Fitch, meanwhile, said it agreed that emerging market credit quality was likely to deteriorate further. It was corporate rather than sovereign debt that was most most likely to defauls. And emerging Europe was the most at risk.

Bah Humbug

Value managers and contrarian analysts long derided as permanent bears have been poking their heads out of the woods to bring some early Christmas cheer to delegates assembled at the CFA Institute’s European Conference in Amstedam.

James Montier, global strategist at SocGen, who likes to swim with sharks in his spare time, opened the conference on Tuesday by saying that he was more optimistic about equities than he had been for a long time, with the UK and European markets approaching bargain basement prices.

But on day two, Matt King, managing director, credit products strategy at Citigroup, rained all over this parade. “I have a message for equity investors,” he said. “It’s worse than you think!”