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, …
Proxy Hedging De-Risk Emerging Market Exposure
HFA Staff
The post above is drafted by the collaboration of the Hedge Fund Alpha Team.