Archive
Reuters blog archive
from Global Investing:
New frontiers to outpace emerging markets
Fund managers searching for yield are increasing exposure to frontier markets (FM) as a diversification from emerging markets (EM), as the latter have been offering negative relative returns since January, according to MSCI data.
Barings Asset Management said on Monday it plans to launch a frontier markets fund in coming weeks, with a projected 70 percent exposure to frontier markets such as Nigeria, Saudi Arabia, the UAE, Sri Lanka and Ukraine.
Emerging markets indices posted relative negative returns compared to developed and frontier markets in the first quarter, index compiler MSCI's 2013 quarterly survey showed. The main emerging benchmark returned a negative 2.14 percent for the quarter, with the BRIC index also posting a loss, though a better performance of Latin American markets offered some promising signs with a 0.48 percent increase.
Southeast Asia posted the top returns, with double-digit figures from the MSCI Philippines Index of 17.87 percent growth and Indonesia returning 13.19 percent. That was a stark contrast to the Brazil, Russia, India, China and Korean indices, which delivered negative Q1 results.
from Global Investing:
This week in EM, expect more doves
With the U.S. Fed having cranked up its printing presses, there seems little to stop emerging central banks from extending their own rate cut campaigns this week.
The most interesting meeting promises to be in the Czech Republic. We saw some extraordinary verbal intervention last week from Governor Miroslav Singer, implying not only a rate cut but also recourse to "unconventional" monetary loosening tools. Of the 21 analysts polled by Reuters, 18 are expecting a rate cut on Thursday to a record low 0.25 percent. Indeed, in a world of currency wars, a rate cut could be just what the recession-mired Czech economy needs. But Singer's deputy, Moimir Hampl, has muddled the waters by refuting the need for any unusual policies or even rate cuts. Expect a heated debate (forward markets are siding with Singer and pricing a rate cut).
from Global Investing:
India, a hawk among central bank doves
So India has not joined emerging central banks' rate-cutting spree . After recent rate cuts in Brazil, South Korea, South Africa, Philippines and Colombia, and others signalling their worries over the state of economic growth, hawks are in short supply among the world's increasingly dovish central banks. But the Reserve Bank of India is one.
With GDP growth slowing to 10-year lows, the RBI would dearly love to follow other central banks in cutting rates. But its pointed warning on inflation on the eve of today's policy meeting practically sealed the meeting's outcome. Interest rates have duly been kept on hold, though in a nod to the tough conditions, the RBI did ease banks' statutory liquidity ratio. The move will free up some more cash for lending.
from Global Investing:
Hungary’s plan to get some cash in the bank
Hungary says it might borrow money from global bond markets before it lands a long-awaited aid deal with the International Monetary Fund. That pretty much seems to suggest Budapest has given up hope of getting the IMF cash any time soon. Given the fund has already said it won't visit Hungary in April, that view would seem correct.
There is some logic to the plan.
Hungary desperately needs the cash -- it must find over 4 billion euros just to repay external debt this year.
from Photographers Blog:
Snow as high as houses
By Bogdan Cristel
When I was little, my grandfather told me about the winter of 1954, when the army had to shovel them out from under snow so high it covered their house completely. I didn’t believe the story at the time as it seemed like a fib, a fisherman’s tale.
Well, I recently realized my grandfather wasn’t exaggerating. I had never before seen snow that would cover an entire house until this February.
from Global Investing:
Emerging markets facing current account pain
Emerging markets may yet pay dearly for the sins of their richer cousins. While recent financial crises have been rooted in the United States and euro zone, analysts at Credit Agricole are questioning whether a full-fledged emerging markets crisis could be on the horizon, the first since the series of crashes from Argentina to Turkey over a decade ago. The concern stems from the worsening balance of payments picture across the developing world and the need to plug big funding shortfalls.
The above chart from Credit Agricole shows that as recently as 2006, the 34 big emerging economies ran a cumulative current account surplus of 5.2 percent of GDP. By end-2011 that had dwindled to 1.7 percent of GDP. More worrying yet is the position of "deficit" economies. The current account gap here has widened to 4 percent of GDP, more than double 2006 levels and the biggest since the 1980s. The difficulties are unlikely to disappear this year, Credit Agricole says, predicting India, Turkey, Morocco, Tunisia, Vietnam, Poland and Romania to run current account deficits of over 4 percent this year.
from Global Investing:
Can Eastern Europe “sweat” it?
Interesting to see that Poland wants to squeeze out more income from its state-owned enterprise (SOE) sector in the face of slowing economic growth and financing pressures.
Warsaw wants to double next year's dividends from stakes in firms ranging from copper mines to utility providers to banks.
from Photographers Blog:
Losing my appetite at the pork festival
Since my return to Romania in January 2009, I longed to cover the pig festival.
My colleague Bogdan Cristel had covered it in past years. But I could not as I was assigned to edit and process the World Ski Championship, which takes place during the same period. Last year, I again edited skiing and thought that this year would be the same: me editing and Bogdan covering it. In January however, I was surprised when the organizers changed the date, providing me with the possibility to go and cover this story.
I remember as a child I once saw a pig being slaughtered, but my memory is blurred. As a city boy, living with my mother on the third floor and my grandparents on the first floor of an apartment block, I never experienced what was normal for village folk. For villagers, pigs, cows, chicken, ducks and geese were slaughtered in the backyard to provide food for the entire family. For me, all livestock came from butchers or supermarkets, frozen or fresh, nicely labeled and packaged.
from Global Investing:
Iceland: slipping again?
Just when you thought it was all over, Iceland looks like it's in trouble again. The cost of insuring Iceland's debt against restructuring or default has risen this week to 720 basis points in the five-year credit default swap market, its highest since mid-2009. That means it costs 720,000 euros a year for five years to insure 10 million euros of Icelandic debt against default.
Icelanders are to vote by March 6 on a deal to repay $5 billion lost in online Icesave bank accounts in Britain and the Netherlands. Those governments compensated savers when the bank collapsed and now want their money back from Reykjavik, but opinion polls show voters are likely to reject what are seen as the harsh terms of the agreement.
from Global News Journal:
Nobel winner says Ceausescu’s spirit lives on in Romania
Brutal dictator Nicolae Ceausescu has been dead for 20 years, but Romania remains dominated by his henchmen, the winner of this year's Nobel prize for literature says.
Herta Mueller, a small, raven-haired writer who grew up in Romania and now lives in Germany, is in Stockholm to receive her award. She is a reticent speaker, but her message -- born from experiencing the bitterness Ceausescu’s repressive regime -- is powerful.
