JP Morgan’s Gartside: Currencies Now Bear the Blunt of Political Risk

Nicholas Gartside, international CEO of fixed income at JP Morgan Asset Management, was recently on Bloomberg discussing South Africa (see: South Africa’s Economic Potential Downgrade Woes (Bloomberg)) when he made the following general observations about evaluating emerging market political risk these days:

[With bonds…] Political risk is reflected in a wider credit spread. But typically, these days, its the currencies that take alot of the strain and that’s been one of the big shifts in emerging markets, from say, the late 1990s. They now got floating exchange rates, they got local developed bond markets. So its much more through their currencies. But let’s face it, political risk is everywhere. This show is dominated by Brexit. It will then be dominated by Spanish elections. It will then be dominated by US elections…

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