Morgan Stanley, Jefferies turn cautious on EMs amid coronavirus fears

Chris Wood believes the best way of hedging long equity exposure is to remain long Eurodollar futures which are now discounting one 25 basis point (bps cut) this year

Escalation of coronavirus fears over the past few days have not only rattled financial markets, but also made global brokerages cautious on the road ahead for emerging market (EM) equities.

On Monday, analyst at Morgan Stanley cut their December 2020 target for the MSCI Emerging Market Index (MSCI EM) from the earlier 1,150 to 1,100 now, translating into a negligible rise. Similarly, the targets for MSCI Asia Pacific index (ex-Japan) – MSCI APxJ, Hang Seng and MSCI China have also been slashed. The brokerage firm also lowered earnings growth forecasts below consensus estimates for all markets, except Japan, which remains