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Mehran Nakhjavani's  Instablog

Mehran Nakhjavani
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Mehran Nakhjavani is a partner at MRB Partners. He formerly managed global and emerging market equity portfolios for 10 years for the asset management division of a major Swiss bank. Prior to running money, his career was in independent investment research: for 8 years covering emerging market... More
  • EM Contagion? No. 0 comments
    Feb 28, 2014 10:57 AM

    1997's Asian crisis was the first in the "emerging markets" era that was driven by private, rather than public, credit excesses. And indeed, there is a strong relationship between the scale of currency depreciation on the one hand, and the growth of credit, along with the private sector's net savings.

    (click to enlarge)Contagion 1997

    Note that as the crisis erupted, there were eight EM economies in the most vulnerable segment, which was an invitation to contagion.

    But, we are now in a very different world. Turkey stars in the role of canary in the coalmine, played by Thailand in 1997, but it is accompanied by very few economies in the most vulnerable quadrant of the chart.

    (click to enlarge)Immunity 2014

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Additional disclosure: I am a member of the Macro Research Board (MRB) and offer investment strategy advice to institutional clients.

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