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from Global Investing:

When Japan was an emerging country

Recent wild swings in Japan's financial markets -- stocks, bonds and the yen -- make Japan look almost like an emerging country.

Back in the 19th century, Japan was an emerging country, with its feudal society based largely on farming.

According to a paper by U.S. based researchers Chiaki Moriguchi and Emmanuel Saez, Japan's GDP per capita in 1890 was at the level of U.S. GDP per capita in 1790, or about $1,200 in 2004 dollars. According to them, this is roughly comparable to the GDP per capita of the less developed countries today.

John Dower,  author of Pulitzer-prize winning "Embracing Defeat" which covered the occupation of Japan by the American forces, describes the late 19th century Japan as "a small country with few obvious resources".

from Global Investing:

Turkey’s (investment grade)bond market

We wrote here yesterday on how Turkish hard currency bonds have been given the nod to join some Barclays global indices as a result of the country's elevation to investment grade. Turkish dollar bonds will also move to the Investment grade sub-index of JPMorgan's flagship EMBI Global on June 28.

Local lira debt meanwhile will enter JPM's GBI-EM Global Diversified IG 15 percent Cap Index --  the top-tier of the bank's GBI-EM index. But the big prize, an invitation into Citi's mega World Government Bond Index, is still some way off. Requiring a still higher credit rating, WGBI membership is an honour that has been accorded to only four emerging markets so far.

from Global Investing:

Less yen for carry this time

The Bank of Japan unleashed its full firepower this week, pushing the yen to 3-1/2 year lows of 97 per dollar.  Year-to-date, the currency is down 11 percent to the dollar. But those hoping for a return to the carry trade boom of yesteryear may wait in vain.

The weaker yen of pre-crisis years was a strong plus for emerging assets, especially for high-yield currencies. Japanese savers chased rising overseas currencies by buying high-yield foreign bonds and as foreigners sold used cheap yen funding for interest rate carry trades. But there's been little sign of a repeat of that behaviour as the yen has fallen sharply again recently .

from Breakingviews:

Brazil’s Rousseff was asking for real’s selloff

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

SAO PAULO - Dilma Rousseff, Brazil’s president, is getting the first market beating of her tenure. Adventurous monetary policy, worries of weakening central bank independence, disco-era industrial policy and even scuttlebutt about insider trading have conspired to hammer the real by 17 percent against the U.S. dollar this month, making it the biggest loser among significant emerging market currencies. Some weakness in the currency was desirable, but as Rousseff may soon learn, it’s tough to regain lost credibility.

from Funds Hub:

A question of trust?

Signs of big-ticket investments from pension funds -- New York State Common Retirement Fund has backed emerging market debt manager Finisterre Capital with $250 mln.

RTXQPR6Despite 2008's losses, pension funds are obviously keen to invest, perhaps because equity mutual funds lost them even more money than hedge funds during the crisis.

from The Great Debate:

Look out for emerging markets inflation

Photo

jamessaft1.jpg(James Saft is a Reuters columnist. The opinions expressed are his own)

Emerging markets could be the first to suffer destabilizing inflation, courtesy of a strong economic rebound, a weak dollar and extremely loose monetary policy in the developed world.

Inflation, in faster growing emerging markets, was not high on the list of worries even months ago, but the speed and strength of the rebound and red-hot asset markets in some places show that it may be a rising threat.

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