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Emerging markets can weather a rate rise: expert

Emerging market economies and equities are now in a much better shape past to weather an interest rate hike by the Federal Reserve, according to an ABN AMRO expert.

Comments over the weekend from Federal Reserve chair Janet Yellen indicated a rate rise was still possible this year. Asian and European markets traded lower on Monday following the remarks.

Emerging markets are particularly sensitive to U.S. interest rate changes, as many governments and companies have borrowed money in U.S. dollars and higher rates can causegreater capital outflows as investors seek returns.

Cristian Baitg | E+ | Getty Images

"Last time the prospects of rate hikes came to the forefront, emerging markets tanked. Investors were worried that higher risk assets would be punished and they sold shares of emerging markets," Maurits Heldring, senior equity research expert at Dutch bank ABN AMRO, said on CNBC's Squawk Box.

"However, we think this time it is different. If rates go up, we don't think emerging markets will suffer."

According to Heldring, his company had recently increased its positions in emerging markets, because of improved economic conditions for commodity exporting countries and more stable currencies.

"A lot of emerging markets are taking structural changes to transform their economies," he added. "This time, emerging markets are in much better shape to weather any rise in interest rates."

However, Maarten-Jan Bakkum, a senior strategist at NN Investment Partners, echoed some of these statements and said emerging market growth had started to pick up.

"There's something else happening these days in emerging markets which will probably make the market more resilient even if the Fed would hike earlier than expected and that's the positive growth momentum," he said on CNBC's Street Signs.

"Emerging markets had been so weak for many years since 2010 and only in the last few months have we seen some improvements in growth momentum, and I would expect that to continue."


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