Reuters – Hedge funds will not walk away from the potential of emerging markets despite the recent rout, and neither will the banks who facilitate their trading, FIMAT International’s head of primebrokerage told Reuters.
Banks’ prime brokerage divisions offer custody, settlement, financing, risk management and reporting services to hedge funds. Fimat is the brokerage arm of French bank Societe Generale.
Philippe Teilhard de Chardin, managing director of FIMAT’s Alternative Investment Solutions unit in London, said the current turbulence in emerging markets would blow over because their growth potential could not be disputed.
“Asia and Latin America are areas of growth… In Asia, trading volumes haven’t reached the levels they reached before the crisis in the late 1990s,” he said in an interview this week.
Russian default sparked an emerging market crisis in 1998 and prompted investors to retreat to traditional safe havens such as U.S. Treasury bonds and the Swiss franc.
Jitters about a global economic growth slowdown and a wave of risk aversion this time has triggered a retreat from stock markets around the world, especially in emerging markets where currencies have also been hit.
But the damage should be more muted because corporate balance sheets are healthier now and borrowing through equity markets, local currency bonds and dollar-denominated bonds is more balanced, Teilhard de Chardin said.
