Shale, other ‘fake quality’ assets at most risk as borrowing costs rise: Carmignac

This translation has been automatically generated and has not been verified for accuracy.World markets could be approaching a tipping point in 2020 as funding costs start to rise, making bonds a riskier investment and some credit sectors, such as U.S. shale oil, particularly fragile, according to asset manager Carmignac.

The impact of these discussions will be felt by markets next year, he predicted, boosting assets such as ‘value’ stocks, emerging market currencies and commodities that were unloved during the years of negative interest rates.But the big risks, according to Saint-Georges, will be in safe-haven assets such as government bonds or in those he describes as “fake quality” -- companies that boomed under low funding costs but could unravel when the easy-money tide turns.

Saint-Georges, who helps run 35 billion euros , also warned that euro zone bond yields were so low, they did not need to rise much to smack bond prices lower. “You don’t have to be uber-bearish on yields to recognize that the bond market’s become quite risky,” he said. “In a Keynesian policy you probably don’t want to be so massively into long-duration assets.”Southern Europe has been a big beneficiary of cheap money, and yields in Italy and Greece, which were mired in crisis not long ago, have fallen the most this year.

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