Global and local risks still in place for EMEA markets

The decision of the PBoC to ease monetary policy should not be enough to trigger any real appetite for EMEA assets in our opinion. The global and idiosyncratic risks that have prevailed over the past few weeks are still in place. The recent sell-off has been equity- and FX-driven while local rate markets have experienced a more limited correction. 

"After the sharp peak in volatility across EMEA markets of late, there has been a sense of stabilisation and relief. This relief could be short-lived and further depreciation is expected in the short term, though at a more moderate pace", says Credit Agricole.

Part of the explanation has been the limited positioning. Inflows from foreigners have been low over the past 18 months and EMEA countries have on average experienced outflows since the beginning of the year despite the ECB's QE.