Frankfurt - The meltdown in global markets is “very serious” as it will weaken prospects for growth worldwide, said Henning Gebhardt, global head of equities at Deutsche Bank AG’s asset and wealth management unit.
“We are expecting some adjustments for the global economic outlook - especially triggered by weaker growth in emerging markets,” Gebhardt said in an emailed response to questions on Monday in Frankfurt. “The low oil price and the changed economic outlook will create another round of global earnings cuts.”
Global stocks have lost $5 trillion since China unexpectedly devalued the yuan on August 11, with investors spooked by signs of further weakening in the world’s second-largest economy. The rout is raising doubt about the ability of the global economy to withstand a eventual liftoff in US interest rates this year.
Developing economies bore the brunt of the sell-off, with the MSCI Emerging Markets Index sliding 4.4 percent at 10.42am in Frankfurt, headed for the biggest one-day drop since September 2011.
Brent crude tumbled through $45 a barrel and oil in New York traded below $40. Oil at that price will have a negative effect on some emerging economies, according to Gebhardt, who helps manage the 1.14 trillion euros ($1.31 trillion) Deutsche Bank invests for clients.
Still, stocks remain attractive as valuations have fallen, he said. “We cannot exclude that the selling pressure will last for a while, but would add to positions, especially in dividend stocks.”
BLOOMBERG