Oct. 2, 2015, 4:32 AM
- Emerging markets are on track to suffer their first annual net outflow since 1988, the Institute of International Finance predicts.
- Foreign inflows are set to halve to $548B this year and outflows are expected to come in at $540B. With local outflows accelerating, net flows will turn negative.
- The flight from emerging markets "has been driven primarily by internal factors, basically reflecting a sustained slowdown in EM growth and amplified by rising uncertainty about China’s economy and policies," the IIF says.
- EMs have also been hit by the commodities rout, to which many are exposed. Weak currencies and political turmoil in countries such as Brazil and Turkey are increasing the risks.
- While those risks remain high, there is little incentive for investors to return to EMs.
- ETFs: EWZ, BRF, BRZU, BZF, EWZS, BRXX, BRAQ, BZQ, BRAZ, BRAF, UBR, DBBR, FBZ, TUR, EMB, PCY, TEI, EDF, ELD, ECON, EDD, EMLC, TKF, GHI, VWOB, CEW, EMD, EDI, MSD, EMHY, HYEM, EMIF, SBW, PXR, FEO, EMQQ, LEMB, EMAG, EMCG, EBND, AYT, PGD, PFEM, JEM, EMEY, EMSH, EMDI, BCHP, FEMB
Apr. 6, 2015, 5:29 AM
- Facing decade-high inflation, a fiscal crisis and water rationing, more than a million Brazilians took to the streets last month to protest government corruption and mismanagement. In China, growth is slowing as property prices fall, propelling more than 1,000 iron ore mines toward financial collapse. In Russia, citizens are deserting their nation’s banks, switching savings into U.S. dollars. Such snapshots of growing distress in the world’s largest emerging markets are echoed among many of their smaller counterparts.
- In aggregate, the 15 largest emerging economies experienced their biggest capital outflow since the crisis in the second half of last year.
- These trends, analysts say, signal a “great unravelling” of an emerging markets debt binge that has swollen to unprecedented dimensions. The pain inflicted by this capital flight is being felt in the real-life economies of vulnerable countries and in a surging number of emerging market corporations that are forecast to default on their debts.
- Source: FT
- ETFs: EMB, PCY, ELD, ECON, EMLC, CEW, VWOB, EMIF, PXR, LEMB, EMCG, EMAG, EBND, AYT, PGD, EMRE, PFEM, JEM, EMSH, FEMB
Apr. 8, 2014, 7:57 AM
- Alongside rallying emerging market equities is a comeback for their currencies as investors grow comfortable with the taper. Also at work is tighter monetary policy in the emerging markets - Turkey, South Africa, and Russia have all boosted rates this year, and Brazil is nearing the end of a year-long rate hike cycle.
- "The appeal of the carry trade has returned. Emergency measures by emerging market central banks have rendered yields much higher, and hence emerging market currencies are much more attractive to hold," says SocGen's Phoenix Kalen.
- ETFs: CYB, CNY, BZF, CEW, ICN, INR, FXCH, INCO, AYT, PGD, JEM
Mar. 21, 2014, 2:42 AM
- Thailand's Constitutional Court has ruled that a snap general election in February was invalid, as protests in several parts of the country prevented voting from being completed on the same day.
- Prime Minister Yingluck Shinawatra had called the ballot in an attempt to quell often violent protests that were aimed at forcing her to resign.
- The court's decision comes two days after the government lifted a state of emergency that had been in place since January as a response to the demonstrations, which were scaled back a couple of weeks ago.
- The turmoil in Thailand has hit the baht and shares, and has threatened the tourism industry.
- Thailand's SET stock index is -0.1%, while the USD-THB is +0.1% at 32.418 baht.
- ETFs: THD, AYT, PGD
Feb. 3, 2014, 8:43 AM
- In order to draw the necessary capital to pull emerging markets out of their swoon, real interest rates have to go higher, says Citigroup. A near-doubling of the benchmark rate in Turkey last week only pulled one-year borrowing costs up to 3.6%, less than half the average in the thee years prior to 2008. The real yield in Mexico (EWW) is about zero. In South Africa, it's 1.4% vs. 2% over the past decade.
- “When you have low real rates and try to finance your current-account deficits, it usually won’t work,” says Citi LatAm strategist Dirk Willer. “If the U.S. is repricing for higher rates, it’s very difficult for you to get away with lower rates. South Africa (EZA) and Turkey (TUR) are not safe yet.”
- EEM -0.5% premarket
- Related ETFs: EEM, VWO, DEM, EDC, DGS, EDZ, CYB, EEMV, SCHE, EEB, CNY, EDIV, BZF, IEMG, DVYE, EEV, EWX, BIK, BKF, CEW, PIE, ICN, ADRE, HILO, INR, EUM, FNI, EET, FXCH, GMM, PXH, INCO, EEMS, BBRC, EELV, FEMS, DGRE, EEME, AYT, EMDD, BICK, DBEM, EMCR, PGD, FEM, EWEM, EMLB, JEM, EMBB, EVAL, TLTE, EEHB, EGRW, FNDE, EMDG, EMHD, EMSA, EMFT, EMDR, QEM, QDEM
Feb. 2, 2014, 2:45 AM
- Thailand is going to the polls today in an election that the main opposition Democrat Party is boycotting and which comes after weeks of mass protests that were aimed at forcing Prime Minister Yingluck Shinawatra to resign.
- Shinawatra's party is projected to win, although the country may be left in limbo due to possible legal challenges and a lack of a quorum of MPs.
- Anti-government protestors have forced the closure of some polling stations in Bangkok and the south, while gun battles took place in the capital yesterday.
- The turmoil in Thailand has hit the baht and shares, and threatens the tourism industry.
- ETFs: THD, AYT, PGD
Oct. 25, 2013, 4:24 AM
- Japanese stocks lead Asian shares lower, plummeting 2.7% as the yen continues to strengthen against the dollar on expectations that the Fed will put off tapering until next year.
- Sentiment is also being hit by the latest cash squeeze in China, which is causing concerns that it could slow the country's economy.
- Hong Kong -0.7%, China -1.45%, India flat.
- ETFs: ADRA, AIA, VPL, ASDR, AAXJ, AXJS, EPP, GMF, GMFS, AXJL, UXJ, JPX, PAF, ASEA, EEMA, DVYA, AYT, JEM, PGD, EWJ, NKY, EWV, EZJ, ITF, JSC, JPP, DXJ, SCJ, DFJ, FJP, JPNL, JPNS, DXJS
Aug. 30, 2013, 10:52 AM
- India is partnering with other emerging market countries to plan a join intervention aimed at halting the rout in their currencies, reports Reuters, citing senior Indian finance ministry official Dipak Dasgupta.
- "It's is going to happen in a matter of days rather than weeks ... Brazil and India can start the move," he says, without making clear exactly which countries are joining the effort.
- Meanwhile, AMP Capital - Australia's 2nd largest money manager - tells the WSJ it's slashed its emerging markets exposure to "zero" as the Fed readies an end to its liquidity binge.
- Emerging market ETFs: AGEM, EEM, ADRE, SCHE, GMM, VWO, DEM, EWEM, PXH, PIE, EWX, DGS, EMLB, EDC, EET, EMSA, EDZ, EEV, EUM, TLTE, HILO, EELV, EEMA, EMFT, DVYE, FEMS, EVAL, EGRW, EMCR, IEMG, EMDR, EEME.
- Emerging market currency ETFs: CEW, AYT, JEM, PGD.
- India ETFs: INDY, EPI, PIN, INP, INDA, INXX, SCIF, SCIN, INDL, SMIN.
- Rupee ETFs: ICN, INR.
Aug. 27, 2013, 3:14 PM
- "Currencies have to go where the market wants them to go," says Marketfield Asset Management's Michael Shaoul, speaking about emerging markets. Central banks have been doing everything from hiking rates and selling dollars to imposing capital controls, but at some point they may need to step aside and let their currencies fall.
- If so, writes Brendan Conway, cheap emerging markets stocks still aren't cheap enough. In today's action: EEM -2.3%, VWO -2.5%, DEM -2.1%.
- Other broad EM ETFs: AGEM, EEM, ADRE, SCHE, GMM, VWO, DEM, EWEM, PXH, PIE, EWX, DGS, EMLB, EDC, EET, EMSA, EDZ, EEV, EUM, TLTE, HILO, EELV, EEMA, EMFT, DVYE, FEMS, EVAL, EGRW, EMCR, IEMG, EMDR, EEME.
- EM currency ETFs: CEW, AYT, JEM, PGD.
- Earlier: India, Turkey, Southeast Asia all pounded.
Aug. 26, 2013, 4:21 AM
- Forex reserves have been falling at Asian banks as they have attempted - not so successfully - to bolster their weakening currencies, which have been suffering partly from the Fed's talk of tapering. Six out of the 10 banks with the largest holdings have cut their reserves this year.
- The Bank of Indonesia's holdings have plunged a record 18% in 2013, while the rupiah has dropped 12%. The Reserve Bank of India's holdings have fallen 4% as the rupee has dropped 12%.
- The trends threaten currencies that central banks bought as they looked to diversify their reserves beyond the U.S. dollar in past years, including the euro, the Swedish krona, the Norwegian krone, the South Korean won, and the Australian and Canadian dollars.
- ETFs: CEW, AYT, JEM, PGD, FXE, ERO, ULE, URR, EUO, DRR, EUFX, ICN, INR, FXA, GDAY, CROC, FXC, FXS,
Aug. 26, 2013, 3:58 AM
- Fed policy makers have rejected calls to take the recent turmoil in emerging markets into account when deciding on when and how reduce the bank's QE program. The fallout from the prospective tapering was a hot topic of discussion at the Fed's Jackson Hole annual get together over the weekend.
- "We only have a mandate to concern ourselves with the interest of the United States," Dennis Lockhart said.
- "They were complaining about us easing too much," James Bullard said. "Now when we start to talk about taper they're complaining about too tight of a policy. They have an independent monetary policy and they have to use that to manage" their own economies.
- ETFs: CEW, AYT, JEM, PGD, AGEM, EEM, ADRE, SCHE, GMM, VWO, DEM, EWEM, PXH, PIE, EWX, DGS, EMLB, EDC, EET, EMSA, EDZ, EEV, EUM, TLTE, HILO, EELV, EEMA, EMFT, DVYE, FEMS, EVAL, EGRW, EMCR, IEMG, EMDR, EEME, FNI, EEB, BKF, BIK, BBRC, EMDD, BICK
Aug. 22, 2013, 5:22 AM
- Emerging-market currencies have continued to suffer losses following the release of the latest FOMC minutes yesterday, which provided little clarity about when the Fed might start tapering its QE program but left the market expecting that it will be next month.
- Ten-year Treasury yields are +2 bps at 2.916%. The recent spike in U.S. debt yields has caused borrowing costs to rise globally, which, along with the rising dollar, has not been healthy for emerging markets with large current account deficits, such as India.
- USD-INR is +0.5% at 65.045 Indian rupees, with the currency hitting a new low of 65.55 earlier.
- USD-TRY +0.4% at 1.9861 Turkish lira, with the currency hitting a new low of 1.9886 earlier.
- USD-IPR +2.1% at 11,050 Indonesian rupiah.
- USD-MYR +0.6% at 3.3102 Malaysian ringgit.
- USD-THB +0.4% at $32.036 Thai Baht.
- ETFs: CEW, AYT, JEM, PGD, ICN, INR
Aug. 19, 2013, 9:28 AM
- The iShares MSCI Emerging Markets ETF (EEM) slips 0.7% premarket after a 5.5% plunge in Indonesia led Southeast Asian stocks lower overnight and India continues to head south. The EEM is off 11.4% YTD, underperforming the S&P 500 by nearly 2800 basis points.
- Maybe more worrisome is the move down in emerging market currencies, writes Enis Taner. In the last 5 such episodes, the S&P (SPY) also fell by at least 7.5% "Ignore the continued weakness in EM currencies at your own risk."
- Related S&P 500 ETFs: IVV, SPY, VOO, RWL, SFLA, SSO, UPRO, SDS, SPXU, SH, EPS, RSP, BXUB, BXUC, BXDB.
- Related EM equity ETFs: AGEM, EEM, ADRE, SCHE, GMM, VWO, DEM, EWEM, PXH, PIE, EWX, DGS, EMLB, EDC, EET, EMSA, EDZ, EEV, EUM, TLTE, HILO, EELV, EEMA, EMFT, DVYE, FEMS, EVAL, EGRW, EMCR, IEMG, EMDR, EEME.
- Related EM currency ETFs: CEW, AYT, JEM, PGD.
Jun. 4, 2012, 11:53 AM
May 30, 2012, 3:39 PM
Only 90 days ago warning of "currency wars" and intervening to weaken their currencies, emerging nations are now moving to prop them up even as growth concerns begin to overtake inflation worries. "Policymakers have to try and strike a very careful balance," says Standard Chartered's Callum Henderson.| May 30, 2012, 3:39 PM | 1 Comment
Mar. 29, 2012, 12:05 PMWith risk poking its head out again, emerging market currencies slide, led today by South Africa's rand (SZR) and the Hungarian forint. Both country's kept interest rates on hold last night, with South Africa's central bank sounding a bit dovish. Also hit are the Mexican peso (FXM) and India's rupee (ICN) | Mar. 29, 2012, 12:05 PM | 1 Comment