Equities: Bounce Over, Downside Ahead

Technical indicators suggest to us that the LatAm equity rally, which has seen most regional markets perform well since the start of October, is coming to an end, and the near-term picture is one of weakness. Again, it is eurozone woes which are likely to drag regional markets lower, although this time around the issue of Italian sovereign debt appears serious enough to warrant a more prolonged sell-off in EM, with potential for many of our markets to head back to their Q311 lows.

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