Category: Emerging Markets

The IMF Yuan SDR Inclusion Leads Emerging Market News


1) Mexico’s FX commission tweaked its intervention program slightly; 2) The political tide in Brazil has turned slightly better for the government; 3) The PBOC announced a rate cut for its Standing Lending Facility (SLF) for local financial institutions; 4) IMF staff has concluded that China meets the requirements to join the SDR basket; 5) As promised, the Hungarian central bank started to focus on unconventional measures; 6) Indonesia’s central bank maintained its benchmark rate at 7.50% but cut reserve requirements; 7) Recent polls ahead of the Argentine presidential elections ar

The Emerging Market Space Remains Soft


EM starts the week on a soft footing.  The repercussions of the attacks in Paris are still unclear, but the dollar’s rise against the majors continues and is likely to keep it bid against EM currencies as well.  Equity markets continue to slide, albeit at a modest pace.

India Election Upheaval Leads Emerging Markets News


1) The ruling party in India, the BJP, was defeated in the Bihar state assembly elections; 2) Brazilian markets have gotten excited about the prospects of a change of the country’s Finance Minister; 3) The MSCI went through with its decision to include several Chinese ADRs into its index; 4) China doubled the margin requirement for stock purchases after markets closed Friday; 5) Mexico’s central bank sounded somewhat less hawkish in its minutes

A Dark Cloud Still Hangs Over Emerging Markets


EM starts the week off on softer footing, as Friday’s jobs report supports the notion of December Fed lift-off.  USD/ZAR is making new all-time highs, and we expect most of EM to revisit the lows from August and September as the lift-off approaches.  Barring a disastrous November jobs report, we believe a rate hike will happen on December 16.  As such, we remain negative on EM near-term.

The Turkish Election and Central Bank News Headline the EM Space


1) The AKP won a majority in the Turkish elections; 2) Colombia’s central bank unexpectedly hiked rates by 50 bps to 5.25% and added some new FX measures to its arsenal; 3) China will lift a freeze on IPOs by the end of the year; 4) Petrobras workers went on strike; 5) The National Bank of Hungary is turning to unconventional measures; 6) Czech central bank now sees an exit from the koruna cap as likely around the end of 2016; 7) Kazakhstan has a new central bank governor

Turkey Shines in the EM Space on Election Results


EM starts the week on a mixed footing.  Turkey is the star performer from the surprise result of the elections that ended the period of political uncertainty, but there was limited spill over to other EM markets.  Energy prices are still under pressure, weighing on sentiment.  On the other hand, prospects of further easing in Europe have helped boost sentiment in equity markets, even as markets remain split on a December Fed hike.

Emerging Market Idiosyncratic Risk Remains in Place


EM starts the week off on a mixed footing.  On the one hand, hints of ECB stimulus and actual PBOC stimulus last week suggest a more supportive global liquidity backdrop for EM and risk.  On the other hand, they are taking those moves due to downside growth risks.  For now, a tug of war between the two is likely to keep EM trading volatile.  Perhaps the final straw will be the US rate outlook, but expect nothing from the Fed this week.

Emerging Markets Feel the Commodity Slide


The week began subdued for EM, but selling pressures continue for the most part.  The dollar is mixed against majors and with the decision about the timing of the first Fed hike still up in the air, it’s hard to see how investors will commit a lot of capital into year end.  The softer tone in commodity prices is also not helping EM.  Still, it seems like the panic sentiment towards EM has subsided, opening the door for more differentiation amongst markets and bottom picking in assets that have been aggressively sold.

Chinese Trade Data and the Turkish Current Account Lead EM News


Positive momentum for EM assets looks to extend its moves from last week.  Buoying EM sentiment is gains in developed markets equity indices, the weaker dollar more broadly, and gains in the commodity space.  Regarding the latter, we note that the moves in the MSCI EM index, for example, have closely mirrored the moves in CRB commodity index, even though the benefits to EM countries from moves in commodity prices are far from uniform.

Brazil is this Week’s Emerging Markets Lowlight


1) The Brazilian central bank had a record monthly loss on its FX swap operations in September, 2) Also in Brazil, the impeachment process got a step closer, 3) Indonesia cuts energy prices and electricity tariffs for the industrial sector, 4) Vietnam’s central bank enacted new regulation to curb holdings of foreign currencies by businesses, 5) There were two policy initiatives from China during the holiday