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31 Jul 2014
Geopolitical risks on the radar screen – BAML
FXStreet (Guatemala) - Analysts at Bank of America Merrill Lynch explained that the low volatility environment largely persists despite geopolitical tremors.
Key Quotes:
“The Russia/Ukraine conflict remains on the radar screen as violence continues and the US and Europe increase sanctions against Russia."
"The Israel/Gaza conflict continues to make headlines and add to global geopolitical turmoil. Conversely, China appears as a bright spot on the EM and global horizons as ongoing policy stimulus supports the government's 7.5% growth target."
"Against this backdrop, most EM assets have continued to grind higher, with equities leading the way in July. Equities, local debt, external debt, and FX returned 2.7%, 0.7% 0.6%, and -0.2%, respectively, in July. However, our GEMs Fixed Income and FX Sentiment Survey shows that investors are still cautious, as real money cash levels remain at close to average levels while hedge funds are either maintaining or lowering their VAR levels.
Key Quotes:
“The Russia/Ukraine conflict remains on the radar screen as violence continues and the US and Europe increase sanctions against Russia."
"The Israel/Gaza conflict continues to make headlines and add to global geopolitical turmoil. Conversely, China appears as a bright spot on the EM and global horizons as ongoing policy stimulus supports the government's 7.5% growth target."
"Against this backdrop, most EM assets have continued to grind higher, with equities leading the way in July. Equities, local debt, external debt, and FX returned 2.7%, 0.7% 0.6%, and -0.2%, respectively, in July. However, our GEMs Fixed Income and FX Sentiment Survey shows that investors are still cautious, as real money cash levels remain at close to average levels while hedge funds are either maintaining or lowering their VAR levels.