Tag Archives: emerging markets

Indonesian President Widodo shuffled his cabinet Egypt has requested a three-year $12 bln loan from the IMF Johannesburg Stock Exchange data on investment flows into South Africa was wrong Fitch downgraded South Africa’s local currency rating by one notch to BBB- with a stable outlook Fitch cut its outlook on Colombia’s BBB rating from stable to negative In the EM equity space as measured by MSCI, Turkey (+4.8%),...

EM ended the week on a soft note, as the dollar reasserted broad-based strength against most currencies. The FOMC meeting this week could see the Fed push back against the market’s dovish take on policy, in which case EM would be likely to remain under pressure. Idiosyncratic risk remains in play across several countries. The Turkish situation remains fluid, with the nation subject to ongoing ratings downgrades....

The New York Times reported that the US is preparing to seize $1 bln in assets tied to 1MDB S&P downgraded Turkey a notch to BB with a negative outlook, citing political uncertainty Turkish President Erdogan declared a three-month state of emergency The Nigerian Naira weakened above 300 per dollar for the first time Brazil’s central bank signaled a longer wait until it cuts rates In the EM equity space as...

INTRODUCTION  After last Friday’s failed coup attempt in Turkey, a measure of calm has returned to global markets.  We did not think Turkish developments have wide-reaching implications for EM assets, but we do remain very negative on Turkish assets in the wake of the coup and ongoing political uncertainty.POLITICAL OUTLOOK Democracy has (so far) been upheld as the coup attempt has failed.  That Erdogan was...

EM ended last week on a soft note, due in large part to the attempted coup in Turkey.  Weakness in the lira spilled over into wider EM weakness in thin Friday afternoon market conditions.  The situation in Turkey has calmed, and so EM may gain some limited traction this week.  However, that calm will likely be very fragile and so we retain a defensive posture with regards to EM. Turkey Central Bank of Turkey meets...

EM and other risk assets rallied on Friday after the strong US jobs data.  It appears that markets are pricing in a benign backdrop for risk near-term; that is, the US economy is recovering but not by enough to warrant an imminent Fed rate hike.  The July 27 meeting seems unlikely, and so the next likely window would be September 21.  Yet EM typically weakens in the run-up to FOMC meetings and so investors should...

Political tensions on the Korean peninsula are rising The IMF cut its growth forecasts for South Africa Brazil announced its 2017 budget target In the EM equity space as measured by MSCI, Hungary (+3.0%), UAE (+2.0%), and Qatar (+0.7%) have outperformed this week, while Mexico (-3.4%), South Africa (-2.1%), and Colombia (-1.7%) have underperformed.  To put this in better context, MSCI EM fell -1.2% this week while...

EM and risk recovered nicely from the Brexit turmoil last week.  Yet we think markets are getting too carried away with the “low rates forever” theme and are likely underestimating the capability of the Fed to tighten before 2018.  This Friday, the June jobs data could spark a shift in sentiment with a strong reading.  Consensus is currently 175k jobs created, up from 38k in May. We don’t think individual EM...

Indonesia’s parliament approved a tax amnesty bill Korea announced KRW20 trln ($17 bln) in fiscal stimulus Czech President Zeman said a referendum on EU and NATO membership should be held Russia ended its tourism ban to Turkey Brazil’s central bank is sending hawkish signals Banxico hiked rates by a larger than expected 50 bp to 4.25% Markets In the EM equity space as measured by MSCI, Brazil (+7.9%), Mexico...

With global attention focused on BREXIT calamity, potentially more important questions are being overlooked, and especially in the South China Sea where storms are currently brewing between China and a range of littoral states for strategic control of territorial waters. To be clear, our long term geostrategic position remains unchanged; China moving towards the ‘nine dash’ line China will gradually secure control of...