Emerging markets and US credit could perform well next year even though markets can remain irrational for longer than makes sense, according to Pictet.

The Swiss private bank sees plenty of value in credit, currently priced, it believes, at extremely low levels in stark contrast to equity valuations which have not reflected the crisis in the same way.

"Investors may look at the crisis situation in the eurozone, the US deficit situation and wonder how to preserve value amid such volatility," says Raymond Sagayam, fund manager at Pictet.

Sagayam thinks recent economic data from the US is encouraging, although continuous positive development is largely dependent on the outcome of the “Super Committee” budgetary cuts.

This week’s news from the US looks far from promising and the committee is yet to reach an agreement.

Sagayam sees ample opportunities in emerging market debt in 2012, as long as Chinese growth stays between 8 and 9 per cent. China is the key factor for emerging markets, according to Sagayam, who monitors the property situation in the country for that reason.

However, Pictet is pessimistic on Europe and is likely to stay that way at least until a solution materialises. For example, Sagayam wants more clarity on a proposed eurobond solution.

Unfortunately, policy-makers are not much closer to a resolution in Europe than in the US. Crucially, German chancellor Angela Merkel remains opposed to eurobonds, an idea supported by José Manuel Barroso, the president of the European Commission.