South African Markets Reeling From Gordhan Probe

The transcript discusses the challenges and risks associated with investing in emerging market currencies, particularly in the context of political events in South Africa. It highlights the inexperience of some asset managers in dealing with such volatility and the broader implications for South Africa's credit rating and national budget. The discussion also touches on the potential impact of the Federal Reserve's actions on the FX market, with a focus on the upcoming Jackson Hole meeting.

What is a major risk when inexperienced managers enter the emerging market currency space?

• They might achieve higher yields.

• They may face increased volatility.

• They will reduce political risks.

• They could stabilize the currency.

What is a common misconception about the risks in emerging market currencies?

• That the extent of the risk is underestimated.

• That they are risk-free.

• That they are easy to manage.

• That they are always profitable.

Why are political risks in South Africa not being adequately priced by the market?

• Due to the belief that risks are exaggerated.

• Because the risks are too low to matter.

• Because the risks are well understood.

• Due to the complexity of pricing political risks.

What could be a consequence of South Africa's political situation on its credit rating?

• An increase in foreign investments.

• No change in the credit rating.

• An improvement in the credit rating.

• A potential downgrade of the credit rating.

What is the market's expectation from the Federal Reserve's upcoming actions?

• No changes in monetary policy.

• Hints on how the bond buying program will end.

• A clear timeline for rate hikes.

• Immediate rate cuts.