Global Emerging Markets Weekly: 1,000 investors on EM

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Global Emerging Markets Weekly: 1,000 investors on EM

EEMEA: long FX carry, Hungary and Ukraine

Hungary is the universal favorite, including for many non-EM investors, and even with

hedge funds in Asia. It would be vulnerable to a counter-trend sell-off on DXY strength.

FX carry trades in EGP, NGN and TRY remain popular with asset managers and hedge

funds alike. This would create a tail risk if USD strength materially overshoots in size and

duration. In local duration, South Africa is the favorite for asset managers. Many see

Czechia as a potential candidate for fading rate hikes priced into the front end.

Kazakhstan local bonds are becoming gradually more popular, but the trade is still in

early stages. In EXD, Ukraine positioning has clearly picked up since the beginning of the

year when investor interest was more focused on the likes of Lebanon and Venezuela.

Views on Romania are mixed, with some tactically long, while others think it loses IG.

Latam: still the consensus long

In local markets, BRL remains a crowded position, while rates have been cleaned out.

Investors expect Lula to win but think Brazil can muddle through. In Colombia, investors

are bullish but with differing views on whether bonds (high spreads) or forex (high carry

plus el Nino) is the best vehicle. In Argentina, the LDM trade is less crowded than in

EEMEA frontier. Investors are also bullish on Peru and turning gradually more bearish on

Mexico, even though the actual positioning in MXN remains long due to cross-over.

In EXD, Argentina and Ecuador remain favored, with divided opinions about whether

Argentina would do liability management before year-end and concerns about the dip in

Milei’s popularity. Sentiment was net bullish on Colombia, but there were questions