Risk aversion is the key for EM: Jacqueline Aldhous

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Jacqueline Aldhous, Head of Offshore Equity Analysis at Forsyth Partners says that it is risk aversion that is the key for emerging markets.

Her views reflect how global analysts are reading this move upto the Fed meeting.

Excertps from CNBC-TV18's exclusive interview with Jacqueline Aldhous:

Q: How are you feeling about what might come through from the Fed later this evening because global markets seems to be fairly stable ahead of it?

A: I think it is hard one to call. This one is less clear as to whether rates would go up. I think the thoughts that they will hike have receded a little bit.

Q: What are the markets pricing in now? How are emerging markets positioned now to take the news from the Fed, you think?

A: I think they are positioned for it to go either way. I do not think that there is a firm view that it is going to be a hike or it isn't. Someone complained to me the other day that all news is bad news because if they hike then it is going to hurt global growth and if they do not hike then in a way we might have inflation. I think it's really risk aversion that is a key for emerging market, some kind of an external shock. If we have something on Iran then I think this is the thing that is going to be the thing that really changes.

Risk aversion just seems to be the key thing for emerging markets right now and I think there is still a great tolerance for risk, which if something comes to change that then I could see a slight quality. In the US they do feel that it is looking attractively valued versus some of the emerging markets especially the megacaps.

Q: You are saying that even if the Fed pauses you are not likely to see any big gush of money back into emerging markets in a hurry?

A: It is hard to know exactly. There is already so much there and they have been the flavour of the month. So it is hard to say.