For more information contact: emailus@marcusevans.com An interview with Natalia Gurushina who is the Immediate Former Head of Emerging Markets Strategy at Roubini Global Economics, a speaker at the marcus evans Emerging Market Investments Summit 2013 who shares her experience on the impact of currency wars on emerging market assets. For more information contact: emailus@marcusevans.com

1. Finding Valuable Assets in the Emerging Markets
Interview with: Natalia Gurushina,
Immediate Former Head of
Emerging Markets Strategy, Roubini
Global Economics
“Emerging markets are no longer as
cheap as they were a few years ago, so
investors must really pay attention to
country-specific fundamentals, risk
exposure and also monitor correlations
in order to find pockets of value,”
advises Natalia Gurushina, Immediate
Former Head of Emerging Markets
Strategy, Roubini Global Economics.
Gurushina is a speaker at the marcus
e v a n s E m e r g i n g M a r k e t
Investments Summit 2013, in
Warsaw, Poland, 3 - 4 June. Ahead of
the Summit, she talks about the impact
of currency wars and how to find
valuable assets in the emerging
markets.
Your presentation at the Summit
will focus on currency wars and
their impact on emerging market
assets. What impact could they
have? What message would you like
to give to emerging market
investors?
The impact would differ depending on
the asset class. The idea I will be
pushing through is that there are more
central banks intervening in the
currency markets than investors think –
and not only in emerging markets. Many
central banks use currencies to address
inflation and growth issues. Only a few
countries actually allow the full extent of
the appreciation/depreciation pressures
to go through the spot market. Low
interest rates in G4 - a part of the
“currency wars” battle-plans - will
continue to stimulate capital flows into
higher-yielding assets in emerging
markets and given the current
valuations, I see a risk of a bubble in
emerging market debt.
How should investors position
themselves?
Right now it is still a good time to look
at idiosyncratic factors in emerging
markets. Despite generally stretched
valuations, a moderate growth/low
inflation environment creates pockets of
value along the yield curves in individual
countries, albeit not as many as before.
We need to continue paying attention to
the dynamics of debt in relation to GDP,
the fiscal accounts (which are a cause
for concern in quite a few emerging
markets) and the independence of local
central banks (as this can affect inflation
expectations down the road).
As regards emerging market foreign
exchange, a very important aspect is
the size of carry in relation to the
underlying macroeconomic imbalances.
To give you an example, even though
Turkish local rates may seem high in
absolute terms, investors are barely
compensated for such risks as inflation,
the current account deficit, local political
risks and foreign exchange mis-
alignment. I think that the Hungarian
forint is in the same “questionable”
higher-yielding FX group.
By contrast, investors in MXN still get a
115bps extra-“cushion” as the same set
of fundamentals warrants a lower
interest rate differential with USD.
What else should investors consider
to minimise risk?
In addition to the traditional approach
to diversification, I think that investors
should also look at correlations and
diversify their portfolio from that point
of view. Correlations are down right
now, but still elevated compared to the
pre-crisis period. Looking at correlations
and monitoring their changes is an
important tool for managing the risk
exposure of the portfolio. Diversification
simply along regional lines or even asset
class lines can often be misleading in
the current environment.
Looking at
correlations
and
monitoring
their changes
is an
important
tool for
managing
the risk
exposure of
the portfolio

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About the Emerging Market Investments Summit 2013
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Summit includes presentations on pinpointing the most lucrative markets to
accumulate maximum returns, avoiding geopolitical risks and tackling overvaluation
when investing in emerging markets.
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