Okay, most emerging stock markets have had a hard time in the last few weeks, but African stocks have failed to shine all year, with lack of liquidity and political uncertainty to blame.
The MSCI global emerging stocks index has fallen six percent in the past six weeks on wobbles over the Chinese and U.S. economies and the euro zone debt crisis.
LONDON, March 22 (Reuters) – World stocks hit their lowest
level in over a week on Thursday, dropping 1.5 percent from
recent 8-month highs, and the euro fell sharply on concern about
contractions in Chinese and German manufacturing.
The HSBC flash Purchasing Managers’ Index, the earliest
indicator of China’s industrial activity, fell to 48.1 in March
from February’s four-month high of 49.6, with new orders sinking
to a four-month low.
LONDON, March 21 (Reuters) – With refinancing becoming a
giant headache for sovereign debtors across the globe, some
struggling emerging economies are securing guarantees from
richer nations or multilateral development banks to bolster
their chances of selling bonds to wary investors.
The guarantee provides the emerging country borrower with
access to otherwise-closed international capital markets, while
the guarantor is extending financial support to a friendly
trading partner at relatively low cost.
Never mind that Fitch upgraded Greece’s rating to B minus this week from restricted default after the country completed its bond exchange — for the credit default swap market, the exchange is still classed as a default. And for Greece, that meant ejection this week from the closely-tracked Markit iTraxx SovX Western Europe CDS index.
Poor Greece has been trading in somewhat of a market hinterland since problems with its debt first led to ratings downgrades in mid-2010. It got ejected first from the Barclays and Citi developed world bond indices and last year its corporate bonds were thrown out of BoAMerrill Lynch’s bond indices.
It’s always hard to calculate how to factor political risk into investment decisions, it can feel a bit like taking a punt.
That may be why analysts are starting to look at the bets on Intrade, a Dublin-based online exchange, to measure market expectations of issues like the chances of a U.S. or Israeli strike on Iran.
It’s a country with one of the highest debt to GDP ratios in the world, it recently launched a debt exchange to avoid a messy default and it is a member of a currency union. Sounds like Greece?
Oh, and its bond documentation already includes collective action clauses (CACs) to force the minority who don’t want to participate in the debt exchange to do so. So it can’t be Greece, as Greece had to retroactively legislate for CACs.
With all the euphoria over the ECB’s LTRO operations and a second bail-out for Greece, the possibility of an Israeli attack on Iran is still lurking in the background as a bigger possible shock to the world.
Higher oil prices as sanctions on Iran start to bite and a fall in Israeli equities — one of the few stockmarket losers this year, according to S&P Indices (see blog below this one) are among the effects so far.
LONDON, Feb 29 (Reuters) – Growing global bullishness
may erode South African stocks’ perceived safe haven status,
which helped them outperform many emerging markets last year
despite infrastructure bottlenecks, political risk and rand
The shift is already evident in returns with shares in South
Africa’s BRIC peers all romping higher, faster than the 7
percent gained by the former this year.
It’s hard to pick the best-performing fund management firms, even if you work in the fund industry yourself.
The same is true for stock-pickers working in banks and insurance companies, according to research by Aneel Keswani from London’s Cass Business School and David Stolin from Toulouse Business School — those analysts can’t pick winners in the sectors they work in.
One has already defaulted on its debt and the other is at risk of doing so, but Ivory Coast bonds are wildly outperforming those of Belize in JPMorgan’s new NEXGEM frontier bond index.
The index contains the debt of 18 frontier markets, and Ivory Coast was the best performing in January, after the borrower said at a roadshow in London last month that it hoped to resume making coupon payments on its debt this year.