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from Global Investing:

Liquidity needs to pick up in EM

Emerging markets have seen heavy selling in the past few months, with political and economic crises hitting the region's currencies and asset markets.

The obvious question now is: Is all the bad news in the price?

London-based CrossBorder Capital, who publishes monthly liquidity and risk appetite data for developed and emerging economies, thinks not.

"It is probably too early to buy the EM sector right now, certainly not until liquidity picks up again," Michael Howell, CrossBorder's managing director, says.

The firm's Global Liquidity Index reading (which ranges from 0-100) for emerging markets stands at 13.3, up from 12.1 in the previous month, weighed down by tighter liquidity in China. This compares with 75.3 for developed markets while even frontier markets have a liquidity score of 70.3, CrossBorder says. The index measures liquidity data from central banks, private sector, cross-border flows and financial conditions.

from Global Investing:

It’s not end of the world at the Fragile Five

Despite all the doom and gloom surrounding capital-hungry Fragile Five countries, real money managers have not abandoned the ship at all.

Aberdeen Asset Management has overweight equity positions in Indonesia, India, Turkey and Brazil -- that's already 4 of the five countries that have come under market pressure because of their funding deficits.  The fund is also positive on Thailand and the Philippines.

from Global Investing:

The annus horribilis for emerging markets

Last year was one that most emerging market investors would probably like to forget.  MSCI's main equity index fell 5 percent, bond returns were 6-8 percent in the red and some currencies lost up to 20 percent against the dollar.  Here are some flow numbers  from EPFR Global, the Boston-based agency that released some provisional  annual data to its clients late last week.

While funds dedicated to developed markets -- equities and bonds --  received inflows amounting to over 7 percent of their assets under management (AUM), funds investing in emerging stocks lost more than 6 percent of their AUM.

from Global Investing:

Frontier markets: safe haven for stability seekers

Frontier markets have an air of adventure and unpredictability about them. One is tempted to ask: Who knows what will happen next?

The figures tell a different story.

In fact, emerging markets overtook frontier markets in terms of volatility of returns as long ago as June 2006, as a recent HSBC report shows. And a more significant milestone was passed a year later, in June 2007, when even developed markets overtook frontier markets in terms of volatility of returns.

from Global Investing:

Turning point for lagging emerging stock returns?

Over the past year emerging markets have broadly lagged an upswing in global equity markets, yielding cumulative returns of 4.5 percent since last August. That's less than half the return developed markets have provided (see graphic below).

But there are two reasons why a  turning point may be approaching. First the positioning. Foreign holdings of emerging equities have plunged in the past six months and according to research by HSBC they are at the lowest in four years. That's especially the case in Asia, where fund managers have been jittery about China's growth slowdown.

from Global Investing:

Emerging beats developed in 2012

Robust growth from the emerging market basket in January was always going to be tough to beat, but research from February's gains show just how strong these markets are performing against developed ones, and not just from the traditional BRICs either, research from S&P Indices shows.

Egypt has been a prime example. Following a bout of political unrest and subsequent removal of Hosni Mubarak after nearly 30 years in power, Egypt's market returns have rocketed, climbing 15.3 percent in February on top of January's 44.3 percent take-off.

from Global Investing:

Central banks and the next bubble (3)

Expectations are running high ahead of next week's LTRO 2.0 (expected take-up is somewhat smaller than the first time and the previous estimate though, with Reuters poll predicting banks to grab c492 bln euros).

The ECB's three-year loan operation, along with the BOJ's unexpected easing, BoE's QE and commitment from the Fed to keep rates on hold until at least end-2014 may constitute competitive monetary easing, Goldman Sachs argues.

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