Utilities, Precious Metals, Real Estate, Canada, France are among the worst

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Emerging markets are under pressure while occasional flights from dollars create spikes of appetite for emerging market assets. Still the overall mood is not as upbeat as it used to be. It looks like developed nations pay attention to emerging market growth, while there is still lacking a co-ordinated effort on behalf of developed market institutions to contain current emerging markets rout, there is a chance that the current rout in emerging markets could be stopped. India still remains investor's darling, as little bad is associated with the destination India. It has been flagged by the BOK that the rates are likely to remain flat now. Still we see market as supported by the overall balanced economic structure and fairly robust growth vs. the remainder of the emerging markets. Turkey proves to be a higher beta play on the emerging markets it bounces in line with the emerging markets index and it is unlikely to diverge far from overall GEM index. Its drag into Syria as well as drag into upcoming November elections weigh on the negative side of the risk equation. Yet if one thinks that one day the peace returns to the region, and Damask, Lebanon, Tehran and Tripoli all become investment destinations as well as Tbilisi, Baku, Yerevan and Odessa, Turkey should benefit. Especially Turkish banks. On our previous calculations global financial center of mass will be located in the Black Sea not far from Istanbul when many of the currently Frontier markets get flows. South Africa could be under pressure, given the rand lagging devaluation vs. reais or the ruble. While Brazil should be quite attractive for most investors looking for bargains on the emerging markets. China still a big worry for most radars. Most of the investors optimism towards China has been connected with liberalisation of its markets and with hopes that liberalisation will create inflows into to China domestic markets. And it makes sense: why hold US AAA debt that yields 2% where you can get hold of the AAA debt in China with 4% yield. But the liberalisation created the flow both ways, in and out of China. While it is still quite difficult to take money out of China the water finds its way while most of the China domestic investors are now looking for dollar exposure, being afraid that yuan is not strong enough to sustain domestic run for the dollars if economy continues to hiccup. While it is insane to think that with over 3 trln$ in reserves yuan can be voluntarily any weaker if PBOC doesn't want it to be weaker. Still the mood of the domestic investors investors creates flows that are not positive for China domestic markets. It is difficult to imagine that optimism returns quickly to the China markets. They are more likely to remain flat through the end of the year in our view, buoyed by the still fairly strong growth that China is generating. Russia macro arguments - balance to just slightly negative vs. extremely negative just months ago. On the positive side for risk months of low oil price have been priced in. While devaluation has created advantages for domestic producers and exporters. Ukraine is a lot more quiet now. Most of the military risk premia for Ukraine can be written off now. On the domestic political front it has been all fairly quiet. Whatever remained of the opposition - was crushed with a small finger by the power vertical in September regional election. So the domestic political risk needs probably to be taken off radar as well. The list of negatives is not long . Here - we list the bleak outlook for growth and further deterioration and pressure on the private sector. This is not something new however. Overall if risk appetite goes from extremely negative to just small negative, this could be very positive for Russian asset prices. Syria is far and Russia is likely to be quite content in the region. It is also quite unlikely that Russia can do anything major in Syria, given that it could harm Israel, while Russia is unlikely to do anything harming to that country, being Israel’s long time ally. Russian strategy is to troll in geopolitical influence to bargain for stuff. One of the key things that Russia is bargaining for is legitimisation of its elite, that has been under pressure recently (and the pressure is not only from sanctions) as it became obvious that it's not the business skills that are important in Russia but the ability to take liaise with the state like in many other emerging markets countries actually. But a combination of the size of Russia, it impulsive outbursts, its pioneering ability to troll as well as to offer murky incentives to its loyals is what weighs negatively on the balance of things for Russia. Although it's quite possible that any of the current BRICS could grow into a pariah like that, Russia has been quite far ahead of the rest of its peers. But it's not impossible that one day the world sinks further into diplomacy a la St.Petersburg in the 90ties when the likes of China, Brazil, or India, or Canada or Korea given that they all are bigger than Russia in dollar terms, could send a crue of its paratroopers somewhere to the other side of earth to show its strength given that US and Russia and a handful of european countries have done it now.