PIMCO says too early to buy emerging markets

HONG KONG (Reuters) - PIMCO, the world’s largest bond fund manager, is still cutting its exposure to emerging markets and turning to high-grade investments in Europe and the United States, the firm’s Asia chief executive said on Wednesday.

PIMCO is concentrating on investing in quality credits that are supported by policymaker actions, rather than bargain hunting in riskier markets, Brian Baker, director of PIMCO Asia Limited, told Reuters in an interview.

“That means more toward the U.S. and Europe and away from the corporates here in Asia, which are still very reliant on export-led growth. The policy support here in Asia would be more toward equity markets than fixed income,” he said.

Hopes that massive government spending and aggressive central bank interest rate cuts will support the global economy have sparked the longest rally in world stock markets in four years and brought Asian credit spreads to the narrowest in almost four months.

However, given the severity of having European, Japanese and the U.S. economies all fall into recessions at the same time, now is not the time to deviate from an admittedly conservative investment strategy, Baker said.

“All policymakers acknowledge that it’s going to be a long road to recovery, so you have to make sure you don’t get into those risk positions too early,” he said.

Editing by Tomasz Janowski