Proxy Hedging De-Risk Emerging Market Exposure

In a recent report Deutsche Bank discusses the implications from proxy-hedging in the Emerging Market (EM) asset space. They believe proxy-hedging among emerging market debt investors seems appropriate as they have to de-risk their portfolio holdings in-line with higher market volatility triggered by talks on QE tapering by the U.S. Federal Reserve. However, should rating  agencies  jump  on  the  bandwagon  by  lowering  their  recommendations  on sovereign debt among major emerging market countries, the worst is yet to come.

Proxy Hedging During Europe Crisis

Deutsche Bank AG (NYSE:DB) (ETR:DBK) noted that on August 12, 2011, a  short-selling  ban  was  introduced  for  Belgium,  Spain,  Italy  and France to calm down equity markets, especially in the European periphery. Before this...