Emerging Markets

EM is starting the week facing several familiar cross-currents.  The dollar is strengthening again, oil prices are still falling, but equities are moving higher.  This constellation seems to suggest a continuation of our call further weakness in EM, but for...

Over the last week, Russia (+10%), China (+1.7%), and the Philippines (+0.3%) have outperformed in the EM equity space as measured by MSCI, while Colombia (-7.0%), Hungary (-6.7%), and Czech Republic (-5.4%) have underperformed.  To put this in better context,...

EM has started the year by extending many of the trends present towards the end of last year. The ruble is on the defensive along with Brazilian assets, while the Shanghai Composite continues to rally. The continued fall in oil...

EM currencies stabilized after the FOMC meeting last week.  Yet the Fed clearly signaled that it remains on track to start hiking rates around mid-2015.  While Yellen’s guidance was taken as dovish (tightening won’t be at a predictable, “measured” pace),...

Over the last week, Colombia (+9.5%), Mexico (+1.9%), and Chile (+0.1%) have outperformed in the EM equity space as measured by MSCI, while Hungary (-9.6%), Turkey (-7.3%), and Russia (-5.8%) have underperformed.  To put this in better context, MSCI EM...

EM currencies remain soft ahead of the FOMC meeting Wednesday.  The Fed is widely expected to modify the language in its forward guidance, which would be consistent with the first rate hike that is expected around mid-2015.  This would be...

1) Indonesia’s recently elected President Jokowi is facing his first major popular challenge2) Turkey raised the daily dollar auction amount from $20 mln to $40 mln3) There are signs of some growing concern over currency weakness in Mexico  4) Brazil...

In 2001, the term BRIC was coined by Jim O'Neill, formerly with Goldman Sachs, who had used the acronym in his thesis on emerging markets of Brazil, Russia, India and China. With inclusion of South Africa in 2010, BRICS was...

Falling commodity prices and better US economic data are the biggest macro drivers for EM, overriding just about all idiosyncratic variables – perhaps with the exception of the weaker yen for Korea. We note that aside from the huge fall...

1) Some EM policymakers are becoming more worried about weak currencies 2) The PBOC failed to drain liquidity for the past three sessions, fueling speculation of a cut in reserve requirements 3) The Reserve Bank of India keep rates unchanged, but indicated...

With the broader dollar appreciation trend losing steam in last several weeks, the fall in oil prices has become the main external variable determining EM performance.  Russia, of course, is the weakest link amongst the major EM countries, but Malaysia...

1) Oil prices have taken another sharp leg down 2) The People’s Bank of China surprised the markets with rate cuts last Friday 3) Malaysia cut fuel subsidies just days after Indonesia’s new President Joko Widodo took similar measures 4) Nigeria devalued the...

The huge reversal last week in the underperforming currencies (BRL and RUB) has put some of the bears on the defensive. In addition, the recent political news (except for Mexico) has been positive: Indonesia's increase in subsidized fuel prices was...

1) Peace talks in Colombia are becoming more tenuous  2) Brazil still doesn’t have an economic team, but there is a frontrunner  3) Center-right candidate Klaus Iohannis won the Presidential election in an upset result  4) Indonesia’s government finally raised...

There were few notable developments out of the G20 meeting that would directly impact EM markets.  However, the escalating tensions with Russia made evident in the meeting have increased to the point that it could again lead to spillover effects....