M&G's Riddell: Why EM debt could be next big short

WHY EM DEBT COULD BE NEXT BIG SHORT

M&G's Mike Riddell has branded emerging market local currency debt the "next big short" as the worsening Eurozone crisis sees investors flee to safe havens such as the US dollar and the Japanese yen.

The manager of the £48m International Sovereign bond fund at M&G said the recent resilience of emerging market currencies was artificial, propped up by a wave of investor inflows. Riddell now expects this to unwind, and he noted signs of the approaching rout can be seen already. 30-year Brazil paper sold off almost 100 basis points versus 30 year US Treasuries this week, a potential sign of things to come, and Riddell said although it had been "bullet-proof" so far as far as the crisis hitting markets was concerned, now that was changing. "Right now, the strengthening US dollar is ...