Featured Articles
Emerging Markets React to Dudley and FOMC Minutes
EM ended last week on a soft note. Fed tightening expectations were buffeted first by hawkish Dudley comments and then by the more balanced FOMC minutes. On net, the markets adjusted the odds for tightening by year-end a little higher...
Emerging Markets Officials Express Exchange Rates Concerns
EM FX ended the week on a soft note, despite the weaker than expected US retail sales report. Official concern about strong exchange rates is beginning to emerge. First, it was Korea, and then on Friday it was Brazil as...
Korea Gets a Credit Upgrade and Thailand’s Constitution Referendum Passes
S&P upgraded Korea a notch to AA with a stable outlook, Voters passed the constitutional referendum in Thailand by a wide margin, The IMF and Egypt have reached a staff-level agreement on a 3-year $12 bln loan program, Argentina’s central...
Emerging Markets Boosted by Lower Rates
Scratch an investor, and you will find two models. One is a fair value model, perhaps based on free-cash-flow or earnings expectations, or breakup value. The other is based on liquidity. We suspect that the latter is overwhelming the former...
Many EM Central Banks Meet though Few, if any, Will Act
EM ended last week on a firm note, despite the stronger than expected July jobs report. As we suspected, one strong US data point is not yet enough to derail the dovish Fed outlook. With the RBA and BOE cutting...
An Emerging Markets Status Update
In the EM equity space as measured by MSCI, Indonesia (+4.2%), Poland (+3.9%), and Brazil (+1.9%) have outperformed this week, while Czech Republic (-5.4%), Singapore (-1.5%), and UAE (-1.3%) have underperformed. To put this in better context, MSCI EM rose...
What’s Up for the Emerging Markets?
EM ended last week on a firm note, helped by the weaker than expected US Q2 GDP report as well as the small bounce in oil. With the RBA and BOE expected to ease this week, the global liquidity backdrop...
Indonesia Leads EM Headlines with a Cabinet Reshuffle
In the EM equity space as measured by MSCI, Turkey (+4.8%), India (+1.4%), and Qatar (+1.3%) have outperformed this week, while Colombia (-6.4%), Mexico (-3.2%), and Singapore (-2.9%) have underperformed. To put this in better context, MSCI EM rose 0.6%...
Emerging Markets Wait for FOMC Meeting
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...
An Emerging Markets Status Update
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...
Emerging Markets Hit by Turkey, Recover, but Defensive Posture Warranted
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,...
Emerging Markets now Between US Jobs Data and the FOMC Meeting
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...
Emerging Markets Stage Nice Recovery
EM and risk recovered nicely from the Brexit turmoil last week. Yet we think markets are being too carried away with the "low rates forever" theme and are likely underestimating the capability of the Fed to tighten before 2018. This...
Indonesia, Czech Republic, and Brazil Lead the EM Headlines
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...
Emerging Markets Grapple with the UK EU Referendum Outcome
The Brexit vote is a game-changer for EM. While the direct impact on EM is limited, the damage to market sentiment is undeniable. In addition, to make matters worse, there will be a protracted period of uncertainty as the UK...