Moneycontrol
Last Updated : Mar 22, 2016 05:19 PM IST | Source: CNBC-TV18

See sentiment towards EMs turning constructive: Crossbridge Cap

The Brussels attacks will only have a sentimental impact on the global markets because the markets are currently more focused on central bank actions and flash PMI numbers from the eurozone, says Manish Singh, Chief Strategist & Head of Investments of Crossbridge Capital LLP.


The Brussels attacks will only have a sentimental impact on the global markets because the markets are currently more focused on central bank actions and flash PMI numbers from the eurozone, which were in line with expectations said Manish Singh, Chief Strategist & Head of Investments of Crossbridge Capital LLP in an interview to CNBC-TV18.

Multiple explosions on Tuesday rocked the Zavantem airport in Brussels. Reports said that several people got injured.


According to him the flash PMI numbers in the eurozone show that the economies are not worsening. Moreover the stimulus provided by the European Central Bank and dovish statement by US Federal Reserve have been taken well by the markets.


Speaking on the choice of his markets, he said the sentiments towards emerging markets seem to be turning constructive at this point. Going forward he does not expect the dollar strength to continue. However, for the runaway sentiment to turn bullish on EMs would take some more time, he said.


Only if the Brussels incident were to become bigger then markets could be impacted, he added.

Below is the transcript of Manish Singh's interview with CNBC-TV18's Reema Tendulkar and Latha Venkatesh.

Reema: How will you read the explosions that we have seen in Brussels and do you expect it to have any kind of an impact on the markets?

A: It is very unfortunate and it will have some impact on sentiment. However I should say that it is not unanticipated given what has been happening in Brussels over last few months.

So, I would say that while it comes as a shock given the loss of life but I would say there would be an impact on sentiment on the margins because it is not unanticipated.

Having said that if you look at the economic data we have the flash PMI numbers come out this morning in France, Germany and Eurozone and it was slightly better than expected or inline with the expectations.

So, that serves as a reminder that the economic conditions are not worsening.

The key factor in everything going forward is always going to be central banks. What we got from ECB was another round of easing. What we got from FED was a very surprising dovish tone. So, that should hold the market as well. So, I would expect that you will not see any bearish run in the market but rather a constructive view at hold or a slight rally but you are not going to see a selloff.

Latha: This event at Brussels, you think the impact is just a days impact and the markets will now start looking for good news like the economy numbers that you mentioned - PMI numbers?

A: I would think so because market has to concentrate on data and the things being done by government and central banks. I think that will always remain the key thing to look at. If these terrorist incidents were to mothball into something bigger then it would have a impact but other than that the fact that we don't know what it is or what it can lead to, I would say that market will concentrate on data.

You have an extremely accommodative central bank, you have extremely accommodative Fed as we saw and you have accommodative Bank of Japan as well.

So, I think that risk will hold and that will be a bigger factor than anything else.

Latha: What are your best markets now?

A: Emerging markets I turned bearish on that couple of months ago or end of last year. I would say that the sentiments are far more constructive now than before.

 The single important reason for me is that US dollar strength is going away. I know there are rumours in the market and everywhere that was there - a deal behind the door at G20, I have a strong feeling that there was some sort of understanding to let the dollar not strengthen. The deal was done, if it was, because it helps everyone.

World needs pockets of real GDP growth and that is only going to come from emerging markets. High asset prices in Europe and US are not going to deliver real GDP growth. So, therefore I think that this thing was done and a stop of dollar rally is going to be good for emerging markets but the runway sentiment bullish will take time to turn in

First Published on Mar 22, 2016 03:46 pm
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