This Isn’t the Big One, Pimco’s Fels Says of Global Market Rout

(Bloomberg) -- The current global equities rout isn’t the start of a big bear market, according to Joachim Fels, global economic adviser at Pacific Investment Management Co.

Instead, the sell off could prove to be a healthy correction that helps extend the current business cycle, he said in an interview in Hong Kong on Thursday.

“I don’t think this is the beginning of the big one," Fels said. "What we are seeing is just normal at this stage of the cycle."

The sell off erased this year’s gains for U.S. stocks and spread to Asia Thursday, with many gauges across the region losing more than 2 percent, pushing the MSCI Asia Pacific Index deeper into a bear market. Investors pin the negative sentiment down to concerns about corporate profits, slowing economic growth and rising interest rates.

Fels likened conditions to a tennis match entering the fifth and final set. While the world economy is slowing, it isn’t yet showing signs of a more pronounced downturn and the next recession is still more likely to come after 2019.

“The important point is that late cycle doesn’t mean end cycle," he said. "This late cycle stage could last for quite some time," just like the fifth set of a tennis match can be prolonged when there’s no tie-breaker to wrap it up.

To contact the reporter on this story: Enda Curran in Hong Kong at ecurran8@bloomberg.net

To contact the editors responsible for this story: Malcolm Scott at mscott23@bloomberg.net, Chris Bourke

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