Mon, Nov. 23, 12:30 PM
- "Hazard ahead: The emerging market credit cycle has turned down," is the title of a recent JPMorgan report, arguing credit markets will tighten as the Fed boosts rates.
- A shoe not yet dropped, says the team, is that debt to GDP ratios are not decreasing.
- "Remember that a lot of the credit growth in emerging markets is no more than the flip side of easy money in developed markets," and as the Fed normalizes, this can reverse, though Europe and Japan keeping their feet on the gas pedal should mitigate the turn.
- The ratio of broad emerging market nonfinancial private credit to GDP hit 128% of GDP in Q1, up 51 percentage points from 2007. Exclude China, and the numbers are not nearly as gaudy, but still frothy, and the moves resemble those from that of developed markets in the years leading up to the global financial crisis.
- ETFs: EMB, PCY, TEI, EDF, ELD, EDD, EMLC, GHI, VWOB, EMD, EMCB, EDI, MSD, EMCD, EMHY, HYEM, SBW, LEMB, EMAG, CEMB, EBND, PFEM, EMSH, FEMB
Mon, Nov. 2, 3:48 PM
Fri, Oct. 2, 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
Thu, Oct. 1, 3:02 PM
- Back in 1988, net capital market outflows were $9B, and they've been positive ever since. This year, according to the Institute of International Finance, net outflows are set to return to the tune of a whopping $540B.
- Meanwhile Federated Investors portfolio manager Ruggero de'Rossi thinks now is the time to buy the dip in emerging market government bonds. The yield spread between sovereign EM debt and comparable U.S. Treasury paper has widened to 420 basis points from a recent low of 250 bps. He likes the risk/reward across a diverse array of EM countries. He's not so bullish on EM corporate debt, however, as many companies have not fully hedged exchange rate exposures.
- ETFs: EMB, PCY, TEI, EDF, ELD, EDD, EMLC, GHI, VWOB, EMD, EDI, MSD, SBW, LEMB, EMAG, EBND, EMSH, FEMB
Thu, Oct. 1, 11:59 AM
Tue, Sep. 1, 12:55 PM
Fri, Aug. 28, 1:11 PM
- Outflows from emerging market bond funds like EMB hit $4.2B in the week ending Aug. 26, the second-largest amount ever. Overall emerging market net outflows of $10.5B were the largest since early 2008.
- Turning back to bond funds alone, outflows over the last three weeks of $7.5B represent 2.9% of AUM, says Morgan Stanley.
- EMB is lower by more than 5% since a late-April high, and in stocks, EEM is off nearly 20% over the same time frame.
- Previously: Record amount pulled from stock funds (Aug. 28)
- ETFs: EEM, VWO, EDC, EMB, PCY, EDZ, TEI, SCHE, EDF, IEMG, ELD, EDD, EMLC, EMF, MSF, EEV, GHI, VWOB, ADRE, EMD, EDI, EET, EUM, MSD, GMM, SBW, DBEM, LEMB, EMAG, EEME, EBND, EMCR, FEM, XSOE, EWEM, HEEM, EMLB, EMSH, EMSA, EMFT, KEMP, FEMB, KLEM
Mon, Aug. 3, 5:41 PM
Wed, Jul. 1, 2:21 PM
Mon, Jun. 1, 2:16 PM
Wed, May 6, 4:36 AM
- A worldwide selloff in government bonds deepened today, buoyed by rising German Bund yields that recently hit record highs and narrowed their gap with U.S. Treasuries.
- Benchmark 10-year Bunds now trade at 0.53%, having hit a record low of 0.05% last month, when many expected them to turn negative.
- The vicious bond market meltdown is also raising pressing questions for investors - is this a correction or merely a trend change?
- ETFs: EMB, PCY, EU, BNDX, ELD, JGBS, EMLC, JGBD, DSUM, WIP, BWX, VWOB, AUNZ, ALD, IGOV, ILB, BUNL, LEMB, JGBL, EMAG, ITLY, ITIP, ISHG, BWZ, ITLT, EBND, CBON, BUNT, GGOV, JGBT, GTIP, PFEM, JGBB, EMSH, CHNB, FEMB
Fri, May 1, 3:31 PM
Mon, Apr. 6, 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
Wed, Apr. 1, 2:04 PM
Mon, Mar. 2, 3:34 PM
Mon, Feb. 9, 3:49 PM
- "Simple broad credit allocations are to be avoided," says Invesco Fixed Income Chief Strategist Rob Waldner. "With volatility comes opportunity, but it is more important than ever for investors to do detailed research to avoid credit accidents that are likely to come with increasing frequency in coming quarters.”
- As for credit's troubles from the crash in oil , current market sentiment and pricing is pricing in a recovery in oil prices which isn't guaranteed to happen.
- Waldner is particularly cautious on high-yield and emerging market debt - both sovereign and corporate.
- ETFs: HYG, JNK, EMB, HYLD, PCY, ELD, EMLC, PHB, VWOB, SJB, IHY, ANGL, HYEM, EMHY, HYLS, PGHY, UJB, LEMB, HYXU, EMAG, XOVR, EBND, QLTC, IJNK, EMSH, FEMB
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