Chris Weafer, chief strategist at ING Bank NV in Moscow, comments on the effect U.S. debt talks will have on stock markets and emerging markets. He spoke in a telephone interview from London today.
“I think that the market will open nervously, but I don’t expect any big moves. Investors still believe that the deal will be done even at the last minute.”
“The reason for that is that consequences of not doing the deal are so catastrophic, so dangerous, that nobody believes that U.S. administration or Congress will be party to that.”
“I think all markets have been affected by the threats of the default in Greece and the U.S. The outcome is much more positive for emerging markets than for U.S. or European equity markets. I expect the investors moving more into emerging markets as a result of these twin debt issues.”
“It’s quite clear that these deals are only temporary measures, that they do not fix the major structural problems that Europe and the U.S. have. The situation in emerging markets is a lot better. Fiscally, emerging markets are in a much stronger position and the rates of growth across the most of emerging markets is also much stronger.”
“Once the threat of a global catastrophe caused by Eurozone or U.S. debt is resolved, there will still be a lingering concern about structural problems of both U.S. and Europe and I would expect to see investors moving back more into the emerging markets because of their fiscal strength and their stronger economic dynamics.”