Why Japan shares can’t get fresh traction

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Japan`s latest batch of economic data and corporate earnings paint a slowly brightening picture, but shares can`t seem to gain any traction.

“The valuations are very modest in our view and if you look at corporate balance sheets, (they) are very, very healthy in Japan. Anything from a bottom up perspective is looking fairly positive,” said Amir Anvarzadeh, director of Japan equities at BGC Securities.

“But unfortunately right now, we`re not really in a bottom up kind of market,” he added. “Unfortunately the market is very macro driven.”

On the surface, the macro-economic data appear positive, with a strong start to the year. Japan`s retail sales rose 4.4 percent in January from a year earlier, above analyst expectations for a 3.8 percent rise and marking a sixth straight month of gains.

Meanwhile, household spending rose 1.1 percent on year in January, well above expectations for a 0.2 percent gain, while industrial output rose 4 percent from a month earlier, also beating forecasts.

But why isn`t that enough to push up stocks? For one, analysts are warily watching for the planned increase to the consumption tax to eight percent from five percent in April, which is likely to dent corporate earnings and consumer spending. Many expect the Bank of Japan will step in with further easing measures afterward.

“There`s some fear of distortion coming from the tax hike where we`re seeing a front loading of consumption happening, particularly for big ticket items like cars and refrigerators,” Anvarzadeh told CNBC.

“Any earnings growth that we`re going to see in the current quarter is going to be seen as kind of flattered,” he said.

“What people really want to see is the quarter after. What kind of drop off are we going to see in end demand and how bad will it be? Until then, I think the jury is out on where the Nikkei is going to go in the short term,” he said. “The concerns are that the economic growth that we`ve seen, that the momentum is just not strong enough going past the sales tax hike and the BOJ would need to become more aggressive with the monetary policy.”

Others are concerned that Abenomics, or the around one-year-old plan from Japanese Prime Minister Shinzo Abe to kick-start Japan`s long-moribund economy, just isn`t living up to its hype.

After the stock market tacked on more than 50 percent last year, “people are sort of waiting for the substance to come on,” said Chong Yoon-Chou, investment director at Aberdeen Asset Manager. “There`s a lot of debate whether Abenomics is actually doing its trick other than quantitative easing.”

The “first arrow” of Abenomics was aggressive easing from the Bank of Japan, which weakened the yen. It was followed by a “second arrow” of ambitious government spending, but the “third arrow” of structural reforms remains elusive.

Chong is doubtful that the quantitative easing had much direct impact on the economy. While the yen weakness flattered corporate earnings, “the impact is actually not direct because Japanese corporates have already rebased their production elsewhere,” he told CNBC.

It`s possible the weaker yen didn`t even serve its traditional purpose of making Japan`s exports more competitive.

“A weaker currency hasn`t translated into the expected export gains,” with Japan`s exporters actually continuing to lose market share, Marcel Thieliant, an economist at Capital Economics, said in a note.

“Companies chose not to cut export prices in foreign currency terms, preferring to reap benefits in terms of surging yen revenues rather than higher volumes and a rising market share,” he said.

Another factor likely to limit the chances of a sustained demand pickup in Japan: raising workers` wages, a key plank of Abenomics, isn`t materializing, posing a “significant threat” to economic recovery, Thielant said.

To be sure, not all of the signs are worrying. Chong noted property prices are increasing.

“That usually is a gauge of animal spirits,” Chong said. “One can debate about the validity of Abenomics, but if they can get the animal spirits up in Japan, things can happen.”

-By CNBC.Com`s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

Copyright 2011 cnbc.com

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Why market panic over Ukraine may be ‘short-term’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The global market fallout sparked by escalating tensions in Ukraine is a “short-term phenomenon” that will blow over in a matter of days, said strategists, as Asian markets pared some of their recent losses on Tuesday.

“There has been some volatility in capital markets as a result of the political and military uncertainty in Ukraine, which have, naturally, exacerbated concerns about the country`s fundamental economic weaknesses. However, I fully expect this to be a short-term phenomenon,” Nigel Green, founder and chief executive of financial advisory firm deVere Group said.

“I believe that this tumble will be judged by history as a `bump in the road` as markets will recover quickly. I`m not worried that we are about to slump into another global recession as a consequence of the deepening crisis in Ukraine,” he added.

Green said as the situation regularizes, in whichever form that might take, investors are likely to classify the Ukraine-Russia stand-off as “a local issue.”

Asian markets began to show signs of stability on Tuesday, with Japan`s benchmark Nikkei  clawing 0.3 percent higher after Monday` 1.3 percent fall, while Hong Kong`s Hang Seng  edged up 0.4 percent following losses of 1.5 percent in the previous day.

Global markets were rattled on Monday following Russia`s military advance into Ukraine that prompted world leaders to call for sanctions on Moscow, including measures targeting banks and officials. President Obama said the US was examining economic and diplomatic steps to isolate Moscow, and he called on Congress to expedite assistance for Ukraine.

Uwe Parpart, head of research at Reorient Group agreed investor panic over escalating tensions in Ukraine would soon come to pass. While political rhetoric has been heating up, the risk of military conformation with the West is low and the crisis is likely to be politically resolved, he said.

“The rhetoric out of London and Washington really is just rhetoric, they have no capability or wherewithal to do anything about it. Additionally, the likelihood of war breaking out between two armies [Russia and Ukraine] that not so long ago was the same army is not very large,” Parpart said.

“This will be politically settled, and may take a while before stability returns, but I don`t see any significant longer-term impact on the global financial situation,” he said.

Another reason Ukraine will have a fleeting impact on global markets is that the country accounts for just 0.2 percent of global gross domestic product (GDP), said strategists.

“Let`s keep things in perspective. Ukraine had a 2012 GDP of $176 billion. Its economy is smaller than Greece, Portugal, or Ireland. It is smaller than the Czech Republic, Algeria, or Peru. So the direct impact on the global economy, even if Ukraine descended into civil war, would be minimal,” said Patrick Chovanec, managing director at Silvercrest Asset Management.

Parpart added even if Ukraine were to default on its debt, it would unlikely have a significant impact on global markets.

“Under the circumstances, that won`t be a huge surprise. You`re not talking about a very large economy,” he said.

Credit ratings agency Standard and Poor`s last week lowered Ukraine`s long-term rating from `CCC ` to `CCC` saying the political crisis had put the country`s ability to service its debt at risk and raised uncertainty over Russia providing promised aid.

-By CNBC`s Ansuya Harjani. Follow her on Twitter @Ansuya_H

Copyright 2011 cnbc.com

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What to expect at China’s big pow wow next week

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With concerns over the stability of China`s financial system at the fore, all eyes will be on the meeting of the country`s parliament, the National People`s Congress, next week for insight into the government`s assessment of the economy and agenda for the coming year.

Beginning March 5, around 3,000 delegates will convene in the Great Hall of the People for a session that is expected to last around nine days.

The NPC is the highest organ of state power that meets yearly to approve policies, laws, the budget and significant personnel changes.

The two main issues to watch for will be the major economic targets for 2014 and whether authorities will walk the talk of reforms.

Premier Li Keqiang is set to deliver the key economic targets at the opening of the NPC next Wednesday. Although Beijing has toned down the importance of gross domestic product (GDP) growth, it remains the most important economic indicator to watch out, say economists.

The government is widely expected to maintain a 7.5 percent GDP target and 3.5 percent inflation target for 2014 to ensure expectations of stability.

“Reform action plans and its implementation will be the focus at NPC and afterwards. To ensure effective delivery of reform measures, Beijing will maintain growth targets at a comfortable range and will likely keep GDP, inflation and targets unchanged,” Qu Hongbin, co-head of Asian economics research at HSBC wrote in a report.

However, some believe the government may add some flexibility to the GDP growth target, by setting a “bottom line” for growth or saying “about” 7.5 percent.

What will the reforms focus on?

Aside from economic targets, the government will unveil further details on its reform initiative following last year`s Third Plenum meeting in November.

“We expect “reform, innovation and upgrading” to be the buzzwords at the NPC meeting,” strategists at Barclays wrote in a report.

The key policy priorities will be deepening reforms, mitigating financial risks and stabilizing growth, the bank said.

As such, tackling the country`s local government debt problem could be top of the agenda, say economists.

“We expect local governments will be legally allowed to run fiscal deficits to finance public projects and will be officially given the access to banks and capital markets during the NPC meeting,” Sylvia Sheng and Ting Lu, economists at Bank of America Merrill Lynch wrote in a report.

“These measures will provide China`s local governments a new source of long-term financing which could help local governments to replace short-term bank and trust loans with longer-duration bonds,” they added.

Other key target areas for reforms include the opening up the state-owned enterprise (SOE) sector, financial liberalization, regulating the shadow banking sector as well as tackling environmental issues as cities across China suffer hazardous pollution levels.

Announcements that are likely to draw market attention, according to Barclays, include the following: moves to allow private and foreign capital entry into services and state-controlled sectors, more free trade zones, measures to improve rural-urban integration and Hukou reform.

Qu of HSBC says judging by the government`s recent positive track record on carrying out reforms, he is optimistic on the implementation of reforms in the months to come.

“A quick review over the 60-point bold reform plan issued after the Third Plenum suggests that action plans over 31 of those have been announced already. These range from the reform of SOEs, the local implementation of the relaxing of the one-child policy…and many more. This recent progress, plus the presence of the Central Leading Group on Reform headed by President Xi, makes us optimistic on the delivery of reforms in the year ahead,” he said.

-By CNBC`s Ansuya Harjani. Follow her on Twitter @Ansuya_H

Copyright 2011 cnbc.com

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Are we being complacent over the yuan’s decline?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As China`s yuan heads toward its steepest ever weekly loss, some analysts told CNBC investors could be underestimating the importance of the move.

The tightly controlled currency has fallen 0.8 percent so far this week and is heading towards its biggest weekly fall on record, Reuters reported. Many have interpreted the move as a signal that Beijing is on the cusp of widening its trading band and taking a step towards liberalization.

(Read More: Yuan to topple dollar as top reserve currency: Survey )

“This is manufactured by the People`s Bank of China (PBOC), there`s no question about it,” Uwe Parpart, the head of research at Reorient Financial Markets, told CNBC.

Parpart told CNBC the Chinese government was deliberately calling attention to their currency ahead of the National People`s Conference in early March, where decisions will be firmed up on the reforms outlined in Third Plenum meeting in November.

“Some of this stuff is going to happen and we think there`s a pretty good chance that some time in the near future we will get a widening of the yuan band from 1 percent to 2 percent,” he said.

The currency is currently allowed to rise or fall by 1 percent in either direction from a level fixed against the dollar set by the PBOC.

But according to Richard Jerram, chief economist at Bank of Singapore, analysts could be underestimating the full extent of the drivers behind the recent weakness.

(Read More: Is China getting ready to widen the yuan`s band? )

“Nearly every commentator out there is reading this as a deliberate move by the People`s Bank of China to introduce two-way risk, and as a prelude to widening the trading band, but I think they are being complacent over the reasons for the move,” said Jerram.

“It could be that China is responding to the loss of some of its competitiveness as other Asian currencies weaken. If that is the case then it would suggest that the policy change signals some trouble in the region in terms of a growth problem,” he added.

Boris Schlossberg, managing director at BK Asset Management, voiced a similar view on CNBC Asia`s Cash Flow on Friday.

“Perhaps [the] more real reason [for the yuan`s recent slump] is the economy in China is not growing as fast, [and] they [the PBOC] would actually like to see the currency lower because they want to stimulate export demand as much as possible,” he said.

(Read More: Yuan as a World Currency? Getting There Fast )

The yuan opened at 6.1275 per dollar on Friday, dipping to a 10-month low of 6.1806 in morning Asian trade, below the PBOC`s midpoint for the fourth session in a row.

The move has attracted a lot of attention from analysts given that previously the yuan had always been perceived as a steady one-way bet.

The yuan rose roughly 12 percent against the dollar from June 2010 until mid-January this year, and has since fallen around 2 percent.

(Read More: Does the yuan`s slide mark a major shift in policy? )

However, Paul Mackel, head of Asia currency research at HSBC, said he strongly disagreed that yuan weakness had anything to do with trying to revive China`s rate of growth.

“I don`t think this is a purposely designed weakness of the currency to actually try and support growth, I don`t think that`s the story,” said Paul Mackel, head of Asia currency research at HSBC.

“If we are actually going to be worried about Chinese growth, seeking a weaker currency is not the way to go about it. It`s going to use other policy tools to try and support the economy,” he said, referring to the use of monetary policy.

– By CNBC`s Katie Holliday: Follow her on Twitter @hollidaykatie

Copyright 2011 cnbc.com

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Highest-rated Oscars ever? See the numbers here

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Academy Awards has started broadcasting, and while most of the attention is on the winners and losers and whether the host is funny, another closely watched aspect of Oscar night are the TV ratings for the often laboriously long ceremony.

The Oscars usually do pretty well with viewers, who can’t seem to get enough of the stars on display, whether they’re posing on the red carpet or tripping over steps on their way to collect their awards and thank their agents, third-grade drama coaches, co-stars, directors, producers and physical trainers.

But since we have to wait to see how the 86th Academy Awards turn out, we can take time now to look at Oscars’ past as a sort of prologue for Sunday night. Here are some numbers on telecasts from years gone by.

(Read more: In a multiscreen home, TV remains king)

The Numbers:

• The most-watched Oscar ceremony was in 1998. The telecast averaged 55.25 million viewers. That was the year “Titanic” took home best picture, and Billy Crystal hosted.

• The only other time an Oscar telecast averaged more than 50 million viewers was in 1983, when “Gandhi” won best picture. The ceremonies were hosted by a foursome of Liza Minnelli, Dudley Moore, Richard Pryor and Walter Matthau.

• The least-watched telecast since 1974 was in 2008, when “No Country for Old Men” took the best picture award and Jon Stewart was host. The show only averaged 32 million viewers.

• The Oscars averaged 40.4 million total viewers last year. Compare that to this year’s Super Bowl, which averaged 52.6 million females viewers alone.

• Speaking of women, 61.8 percent of viewers for last year’s Oscar’s telecast were female.

• Oscar telecasts are more for the upscale crowd. For 2013, the average household rating was 24, but in homes with incomes more than USD 100,000, the average rating was nearly 35.

• The top five spenders for advertisers over the past five years for Oscar telecasts have been Hyundai at USD 56.5 million, J.C. Penney at USD49.4 million, Coca-Cola USD41.4 million, American Express USD24.4 million and Samsung USD24 million.

• McDonald’s has advertised in every Oscar telecast since 1992; American Express in each since 1993; and Penney since 2002.

• The 2013 Oscar telecast produced a record USD 88.3 million in ad sales.

• The 2013 Oscars saw an increase of almost 200 percent over 2012 in terms of social media comments. There were more than 14 million social media comments, 13 million on the show day alone.

(Sources: TV ratings and demographics from Nielsen: ad figures from Kantar Media.)

—By CNBC’s Mark Koba. Follow him on Twitter @MarkKobaCNBC.

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Hedge funds sit out the emerging market turmoil

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Hedge funds usually thrive on volatility, but many of them are sitting out the emerging market turmoil even as they become more positive on the segment.

Greater differentiation among global emerging markets, leading to less correlation within the asset class, should offer hedge funds more scope for returns as they typically make both long and short bets.

(Read more: 2014: The year hedge funds fight back)

“Hedge funds are still viewing emerging markets as a great opportunity now that it’s no longer moving in synch with other markets,” said Nicolas Campiche, chief executive officer for alternative investments at Swiss private bank Pictet.

But he added, “We’re very picky,” with most of the exposure through macro managers.

(Read more: These big hedge funds got crushed in January)

Many hedge fund managers are keeping their exposure to the segment relatively low. Indeed, they increasingly say they are “under-invested” in emerging markets – or that they believe their risk position should be increased if they were aligned with their sentiment, according to a survey by Societe Generale, which found this described about 42 percent of the hedge-fund clients surveyed.

The problem may be that emerging markets simply aren’t developed enough for hedge funds’ strategies.

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“Most hedge funds in emerging markets tend to be long only. I don’t want to pay 2/20 for that,” Campiche told CNBC, referring to the typical hedge fund fee structure of 2 percent of assets invested and 20 percent of returns. Getting emerging market exposure via equity funds would be cheaper, he said.

Others also cited the limitations affecting hedge funds’ investments in emerging markets.

“Running a true long-short in many emerging markets is difficult,” said Misha Graboi, a portfolio manager for Pacific Alternative Asset Management Co., or Paamco, a fund of hedge fund firm.

“In many emerging markets, either there are outright prohibitions on shorting or getting the liquidity or the shorting costs are prohibitively high,” Graboi said.

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“Sometimes they end up just shorting an index and the problem of shorting the index in emerging markets is that they tend to be dominated by one industry or even one company,” he added. “Long some stocks and short the index would be an explicit sector bet in some emerging markets.”

As an example, he cited Samsung Electronics’ dominance of South Korea’s stock market. Samsung Electronics is the Korean stock market’s biggest capitalization stock and it has an around 25 percent weight in the benchmark Kospi index. Samsung and Hyundai Motor together account for about 21 percent of the benchmark Kospi index’s total market capitalisation.

He noted Paamco has limited exposure to emerging markets, mostly through pan-Asia managers, and it prefers investing in developed markets.

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1 

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Cashin: What the market heard when Yellen spoke

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Art Cashin said Federal Reserve Chair Janet Yellen “did no harm” to the stock market during her testimony Thursday before a Senate committee.

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After Yellen concluded her appearance, Cashin, UBS’ director of floor operations at the NYSE, told CNBC’s Bob Pisani, “She said, ‘Yes, certainly, the weather is evident but none of us know, yet, whether it’s having an impact.’ She said, ‘We will continue to taper,’ but left the door open very slightly saying that if the data continues to deteriorate that they might reconsider and taper the tapering, which gave the bond market a little sigh of relief.”

Cashin added that Yellen didn’t get too much grilling during her appearance, in part because “most of the Senators … are a little wary of looking like they are attacking a friendly, older woman. So she’s got that going for her.”

—By CNBC’s Alex Crippen. Follow him on Twitter @alexcrippen.

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US sales of new homes leap 9.6% in January

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Sales of new single-family homes surged to a five and a half-year high in January, which could ease concerns of a sharp slowdown in the housing market.

The Commerce Department said Wednesday that sales jumped 9.6 percent to a seasonally adjusted annual rate of 468,000 units, the highest level since July 2008.

December’s sales were revised up to a 427,000-unit pace from the previously reported 414,000-unit rate. Economists polled by Reuters had forecast new home sales, which are measured when contracts are signed, falling to a 400,000-unit pace in January.

(Read more: Stocks hover around flatline despite upbeat housing report)

Sales in the Northeast soared 73.7 percent to a seven-month high, while the South recorded a 10.4 percent rise in transactions to a more than five-year high.

These regions have borne the brunt of the unseasonably cold weather that has been blamed for holding back economic activity. Sales, however, tumbled 17.2 percent in the Midwest last month, while rising 11 percent in the West.

Housing lost momentum in the second half of last year following a run-up in mortgage rates and a persistent shortage of properties on the market.

(Read more: Mortgage applications at lowest level in 2 decades)

Declines in residential construction and building permits and sales of previously owned homes last month had raised concerns that the sector, which is key to the economy’s recovery, was slowing down sharply.

New home sales rose 2.2 percent compared with January 2013.

Last month, the supply of new houses on the market was unchanged at 184,000 units. The median price of a new home last month rose 3.4 percent from January 2013. At January’s sales pace it would take 4.7 months to clear the supply of houses on the market. That was down from 5.2 months in December.

(Read more: Chart of the Day: The mortgage market’s plunge)

A supply of six months is normally considered a healthy balance between supply and demand.

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Will gold see double digit declines this year?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Gold has been the best performing asset class this year, according to investment firm Coutts, rallying 10 percent year to date, but some analysts have warned investors not to get too comfortable.

Dominic Schnider, head of non-traditional asset classes at UBS, told CNBC Asia’s “Squawk Box” on Wednesday that the 2014 rally was set to end in tears, and gold and silver would see double-digit declines this year.

“Some of the buying we have seen recently is not really driven by fundamentals, but is more momentum driven. That should run out of steam – so we’ll see double digit declines on the precious metals this year,” said Schnider, who is a long-term gold bear.

(Read More: Gold eyes 4th week of gains on Ukraine default fears)

Gold traded near a four month high, hit the previous day, in Asian trade on Wednesday, opening at over USD1,340 an ounce. Worries over the strength of the US recovery and political turmoil in the Ukraine revived appetite for the safe haven trade.

Silver prices, meanwhile, which are strongly correlated to the gold price, has rallied over 14 percent since the start of February to USD21.79 an ounce.

The precious metals’ performance this year a far cry from the pain of last year, when the Federal Reserve induced tapering panic send the yellow metal plunging 34 percent from April to June. The Fed’s quantitative easing program and ultra-low interest rate policy has been one of the key drivers of gold strength in recent years.

But, despite the precious metal’s apparent turnaround this year, UBS’s Schnider told CNBC gold’s fortunes were set to turn ugly once again, as investors turn more positive on the global economy.

Schnider told CNBC he saw gold prices falling to USD1,050 per ounce on a 12 month view, while silver prices trading at around USD18 by year end.

(Read More: This will drop gold to USD1,000: Credit Suisse pro)

“Think about it, we are in a risk on environment probably going into the second quarter of this year, rates [on 10-year Treasurys] are going to rise faster than most people expect and the dollar’s going to strengthen [and] we are looking at an environment where equities continue to do well,” he said.

“So if you consider that there is a good chance that some of the buying which was mostly driven by futures will actually revert, and then you are going to see Exchange Traded Funds (ETF) outflows,” he added.

Last week, hedge funds plowed into gold and crude oil as prices rallied last week. Data released Friday showed the bullish money wagered by commodity speculators was driven to the highest level since 2011, Reuters reported. Gold accounted for USD2.9 billion, or 21 percent, of the weekly increase of USD13.5 billion in managed money net longs.

Gold bulls, however, say there is still a plethora of positive drivers that should help gold’s bullish run continue through the rest of the year.

One bullish factor is growing demand from China, which is set to surpass India as gold’s largest importer. The China Gold Association revealed last week a record level of Chinese gold consumption in 2013, which was estimated to have risen 41 percent to 1,176 metric tons from the previous year.

(Read More: Euro Pacific Capital’s Peter Schiff says gold will jump)

“We do believe the underlying physical market is making adjustments as there has been a moderation in primary production and a collapse in recycling,” said David Lennox, resources analyst at Sydney-based trading firm Fat Prophets, who sees gold ending the year between USD1,350 and USD1,400 an ounce.

“At the same time, there has been an uplift in jewelry demand and demand from sovereign governments, because of the uncertainty in paper assets. Furthermore, investors are more comfortable with the idea of Fed tapering, which will be good for gold,” he added.

According to Lennox, the US government will soon turn its attention back to addressing its budget deficit again, inevitably putting pressure on the US dollar and boosting gold as a result.

(Read More: Gold to tank in 2014:Goldman Sachs)

— By CNBC’s Katie Holliday: Follow her on Twitter @hollidaykatie

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Emerging markets now offer ‘fantastic value’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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After months of fund outflows, emerging markets shouldn’t be treated like pariahs as they offer solid value, analysts said.

“Emerging markets have really been beaten up a lot, probably a bit unfairly since most of last year and into this year,” said Julie Dickson, emerging market equity portfolio manager at Ashmore Investment Management, which has around USD75.3 million under group management. “It means fantastic value.”

(Read more: How fragile are emerging markets?)

Emerging markets have seen a brutal sell-off this year after sharp falls in the value of the Argentine peso, Turkish lira, South African rand and Brazilian real triggered panic selling across the asset class, with analysts largely blaming the turbulence on the Federal Reserve’s move to begin tapering its asset purchases.

Funds have flowed out of emerging market equity funds for 13 consecutive weeks, according to data from Jefferies, with a total USD18.76 billion exiting the segment so far this year.
But while concerns about tapering and the potential for higher interest rates have decked emerging market assets, not everyone is certain this will hurt economies.

“These markets and their central banks have so much firepower to deal with it and to step in where needed, that I think the risks are overstated and overdone,” Dickson told CNBC, noting some markets have rebounded since September of last year after stepping up efforts to deal with currency imbalances and fiscal issues.

(Read more: Emerging market opportunity in long term: Blankfein)

She isn’t the only one who isn’t terribly concerned about tapering’s effect on emerging markets.

“I don’t buy the theory that a lot of the money that came out of the US came into the emerging markets during quantitative easing,” said Kelvin Tay, regional chief investment officer at UBS Wealth Management. He believes the instead that the Fed’s easy money policy spurred a lot of borrowing by companies in Asia and Latin America.

(Read more: Are markets headed for a perfect storm?)

“If the rates go up gradually, if the 10-year US Treasury yields go up gradually, I don’t see a risk to the systems here or in Latin America. But if the rates go up very sharply then you have a problem,” he told CNBC.

But both Dickson and Tay are selective on which emerging markets to play, preferring the Asian region and tipping South Korea and China as value plays.

Emerging Asia shares are trading at 10.4 times 12-month forward earnings, below the five-year average of 11.5 times, according to data from Credit Suisse. Emerging Europe is at 6.3 times earnings, compared with a five-year average of 7.0 times, while Latin America is at 11.2 times, compared with a historical average of 11.5 times, the data show.

Both South Korea and China are “deeply undervalued,” Tay said, noting the two markets offer plays on Asia’s tech sector. Tay is also positive on China’s bank and property sectors, despite concerns over a potential real-estate bubble and worries over non-performing loans (NPLs).

(Read more: Are China market dabblers throwing in the towel?)

“The market has overreacted,” he said. “We don’t think the NPLs are going to spike up very, very sharply. There might be a rise but, it’s not going to go to a level where it’s going to cause systemic risk to the Chinese economy,” Tay said.

“You’ve got to step backward and remind yourselves that China has USD3.8 trillion in reserves,” he said. “Then they have another 80 trillion yuan in investments that they can actually sell if they need to prop up the system.”

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow