Multi-Asset Essentials

ASR sentiment indicators reach extended levels

MSCI Emerging Markets is showing stretched optimism, according to our SBI*, raising the risk of a setback. No key chart level broken yet for EM vs. DM. Buying DM stocks with EM exposure has worked better but is due a consolidation period.

Attention on Chinese policymakers, Indian politicians

MSCI China also showing stretched sentiment. ASR not convinced we’ve had ‘policy capitulation’ to fuel a prolonged rally. Some evidence of investors trimming India exposure as China bounced. More convincing signs of election outcome hedging.

Option opportunities

Huge implied-realised Indian equity volatility premium turns attention to USDINR calls as hedging vehicle. Brazil oversold vs. ACWI, EM & China in SBI terms despite commodity price strength. Bovespa & EWZ implied vol is low, leaving calls cheap.

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