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Felicia Tan
June 17 17:00

Swiss bank UBS notes attractiveness of the ruble and Russian assets in EM sector

Some emerging markets may become overly dependent on funding from central banks instead of relying on capital markets.
Analysts of the Swiss investment bank UBS noted in the review published the previous day for clients the attractiveness of the ruble amid expectations of global economic recovery in the second half of the year, rising oil prices and "adequate" monetary policy and significant reserves of Russia.
At the same time, UBS cautions against developing countries with "less reputable central banks" that have launched programs like QE (quantitative easing, asset purchases) and risk eventually triggering high inflation.
The Bank notes the risk that some EMs may become overly dependent on funding from central banks rather than relying on capital markets.
Analysts fear that the monetary authorities may provide more funds than they require to maintain financial stability even in conditions of coronavirus-related shocks.
Although Emerging Markets' government bonds should benefit from improved economic growth prospects in the light of soft monetary policy, there are many risks associated with QE-style instruments, experts warn.