Why EMD bear Leaviss has bought into emerging FX

M&G's Jim Leaviss established small positions in selected emerging market debt and currencies at the end of July despite remaining bearish on the asset class as a whole.

Leaviss and his M&G colleagues have long expressed caution on EMD, and more recently have pointed to a China slowdown and possible withdrawal of US quantitative easing as key risk factors. However, with EM assets enduring a sharp sell-off this summer as investors began to focus on the risks of an end to QE, Leaviss added positions to his M&G Macro Bond fund in both debt and FX. He and deputy manager Mike Riddell established positions in EM currencies that recently experienced "major corrections": the Mexican peso, Malaysian ringgit, Philippine peso and Thai baht. The moves took net...