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...
Under Pressure, Emerging Markets Likely Facing a Mushy Week
EM ended last week under pressure. With two potentially disruptive events (FOMC meeting and Brexit vote) still in play, we think that EM softness should carry over into this week. Markets remain jittery about the June 23 Brexit vote, as...
Emerging Markets Pop off US Jobs Data, May not Last
EM ended the week on a firm note after the US jobs shocker. While we view the weak reading as a fluke, shifting market perceptions of Fed tightening risk should keep EM bid near-term. However, we think the July FOMC...
Do Emerging Markets Have You Sea-Sick?
In the past year, investors have seen emerging markets thrive, plunge, re-emerge and re-decline. Despite the volatile short-term story, the fundamentals of the emerging market assets remain strong. Last fall, the Wall Street Journal reported that rich nations were “losing...
India’s Rajan Wants to Step Down; Brazilian Politicians are Forced Out
In the EM equity space, China (+4.1%), Brazil (+3.0%), and Hong Kong (+1.8%) have outperformed this week, while Poland (-2.6%), Russia (-2.1%), and Qatar (-1.9%) have underperformed. To put this in better context, MSCI EM rose 1.4% this week while...
BRICS Need to Act Their Age
The rise of non-Western emerging powers like Brazil, Russia, India and China is a reality that has shaped South Africa’s foreign policy under President Jacob Zuma. Foreign policy under Zuma has been characterised by his country’s growing closeness with these...
Emerging Markets Vulnerable to FOMC, UK Referendum Outcomes
EM ended last week on a soft note. The icing on the cake was Yellen’s speech Friday afternoon, which confirmed the more hawkish stance seen in the FOMC minutes and other recent official comments. We warn that with the FOMC...
An Emerging Markets Status Update
In the EM equity space, India (+5.3%), Taiwan (+4.1%), and Hong Kong (+3.6%) have outperformed this week, while Colombia (-1.5%), Qatar (-0.9%), and China (-0.5%) have underperformed. To put this in better context, MSCI EM rose 2.9% this week while...
Emerging Markets’ Rocky Road
EM had another rocky week, but managed to end on a slightly firmer note Friday. Market repricing of Fed tightening risk was the big driver last week, and that could carry over into this week. There are several Fed speakers...
Positive Dollar Sentiment, Idiosyncratic Risks Weigh on Emerging Markets
EM ended last week on a soft note, and that weakness seems likely to carry over into this week. Dollar sentiment turned more positive after firm retail sales data on Friday, though US rates markets have yet to reflect any...
Could a Dovish Fed Limit the EM Currency Sell-Off?
In light of the Fed’s dovish tilt in March, the global liquidity outlook turned further in favor of EM. As a result, EM extended the bounce off the January/February lows. There is no clear narrative as to why EM is...