Wells Fargo's McKenna on EM FX

The video discusses the hunt for real yields in emerging markets, focusing on Latin America and Asia. It highlights the attractiveness of EM currencies due to favorable valuations and elevated real interest rates. The discussion also covers the impact of China's economic rebound and the potential risks in Turkey and Argentina, emphasizing the political and economic challenges these countries face.

What is one reason why emerging markets, especially in Latin America, are expected to outperform?

• They have a strong technology sector.

• They managed inflation earlier than developed markets.

• They have a large population.

• They have high levels of foreign debt.

Why are foreign investors attracted to emerging market currencies?

• High levels of corruption.

• Attractive valuations and interest rates.

• Lack of competition.

• Strict government regulations.

What is a potential consequence of China's economic rebound maturing?

• Strengthening of the US dollar.

• Underperformance of EM Asia currencies.

• Rise in global oil prices.

• Increased demand for European currencies.

Which Latin American currency is mentioned as being bullish due to the commodities story?

• Mexican peso

• Argentine peso

• South African rand

• Turkish lira

What is the expected outcome for the Turkish lira if Erdogan remains in office?

• Increase in foreign investments.

• Sharp depreciation against the US dollar.

• Stability in the currency market.

• Appreciation against the US dollar.

What is a major issue facing the Argentine peso?

• Strong economic growth.

• Loss of central bank credibility.

• Political stability.

• High levels of foreign investment.

Which Asian currency is mentioned as having been clobbered last year but is now recovering?

• Japanese yen

• South Korean won

• Chinese yuan

• Indian rupee