EM Buyside Knocks Sellside

EM investors see increasing counterparty risk in the markets and are critical of the sell side, particularly their research. “If you guys aren’t taking risk or providing liquidity, these markets are quite thin,” says James Barrineau, head of economic analysis at dedicated investor Alliance Bernstein, referring to the sell side. “This is a time when we are constrained as buyside investors due to this lack of liquidity, so a lot of the ideas, a lot of the effort that goes into sell side research is kind of wasted here,” he adds. Barrineau says his shop is hungry for “out of the box thinking” and that economists’ blogs can often replace sell-side research. Research has become too complex and compartmentalized, says Tulio Vera of Bladex Asset Management. “I find often a discontinuity between the desks and the research teams . . . research teams are providing ideas that are not necessarily very realistic from a relative value or from a liquidity point of view,” says Vera, who led EM macro and debt strategy at Merrill Lynch for 9 years. “That’s something I think that is going to have to come together somewhat better, especially as desks and teams both on the buyside and sell side consolidate more,” he adds. They were speaking an EMTA event in New York last week.