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‘Seeing real panic across mkts; but India may outperform’

The slump in global equity markets today can be attributed to the bouts of weakness persisting in emerging markets — particularly China, where worse-than-expected PMI data seemed to be confirming the worst.

The slump in global equity markets today can be attributed to the bouts of weakness persisting in emerging markets — particularly China, where worse-than-expected PMI data seemed to be confirming the worst.

In an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, Micheal Every of Rabobank said he expects emerging market stocks to continue to face weakness.

“I think we’re seeing real panic right across the market,” he said. “India is relatively outperforming at the while. But investors will need to see decisive steps [by the government] in India.”

Below is the transcript of the interview on CNBC-TV18.

Latha: Is the new growth scare because of the Chinese PMI numbers?

A: I think that hasn’t helped matters but we have already got a huge amount of negative sentiment momentum building. And given that we have got much worse numbers [from China PMI], the lowest we have seen since March 2009, it underscores the scale of the problems in the Chinese economy. Yes, we are seeing further headwinds and that is obviously putting pressure on emerging markets.

Latha: Do you see them catching their breath and the fall taking a break by the end of trading today at all?

A: Very hard to say. Coming into the end of the week, sometimes people decide to take a little bit of profit on positions and you can see some kind of reversal. However, I have to say it looked to me more yesterday that we got that profit taking in advance yesterday.

Emerging market (EM) currencies were under huge amount of pressure for most of the day and at the end of the day the dollar itself weakened quite significantly. So, maybe dollar has already seen that dip and today we will continue to see further selling pressure.

It remains to be seen but I have to say I think when the major markets coming in Europe, London and US see that Chinese number, they are not going to very happy.

More to come.

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