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27 Jun 2013
Flash: Month-end position rebalancing to garner attention – Societe Generale
FXstreet.com (New York) - According to Kit Juckes at Societe Generale, “Month-end position-adjustment and portfolio rebalancing will probably dominate markets and headlines in the next few days.”
In particular, this makes any bounce in emerging markets, by and large the focus as of late, likely to be short-lived. Outflows from EM funds, “the inability of holders of EM equities and local market debt to do more than use FX as a proxy hedge, suggest that there is a fair amount of volatility ahead, and a lot of risk, too. Credit, following equities, may see a better bounce but the lack of liquidity in the sell-off is a source of concern to anyone with a large portfolio.” Juckes adds.
In particular, this makes any bounce in emerging markets, by and large the focus as of late, likely to be short-lived. Outflows from EM funds, “the inability of holders of EM equities and local market debt to do more than use FX as a proxy hedge, suggest that there is a fair amount of volatility ahead, and a lot of risk, too. Credit, following equities, may see a better bounce but the lack of liquidity in the sell-off is a source of concern to anyone with a large portfolio.” Juckes adds.