Global Investing

Time running out for Hungarian bonds?

February 27, 2013

Could Hungary’s run of good luck be about to end?

Despite controversial policies, things have gone the country’s way in recent months — the easing euro crisis and abundant global liquidity saw investors flock to high-yield emerging markets such as Hungary and also allowed it to tap international capital for a $3.25 billion bond. It has slashed interest rates seven times straight, cutting them this week to a record low 5.25 percent. The result is an increased reliance on international bond investors. Foreigners’ share of the Budapest bond market  is almost 50 percent, among the highest percentages in emerging markets.

Twenty years of emerging bonds

February 25, 2013

Happy birthday EMBI! The index group, the main benchmark for emerging market bond investors, turns 20 this year.  When officially launched on Dec 31 1993, the world was a different place. The Mexican, Asian and Russian financial crises were still ahead, as was Argentina’s $100 billion debt default. The euro zone didn’t exist, let alone its debt crisis. Emerging debt was something only the most reckless investors dabbled in.

Mexico manufacturing its way to investors’ hearts

February 25, 2013

By Stephen Eisenhammer

Mexico appears to be the new Latin American darling for investors. With Brazil stalling, Latin America’s second largest economy is back in, after nearly two decades out in the cold.

Emerging Policy-More cuts and a change of governors in Hungary

February 25, 2013

All eyes on the Hungarian central bank this week.  Not so much on tomorrow’s policy meeting (a 25 bps rate cut is almost a foregone conclusion) but on Friday’s nomination of a new governor by Prime Minister Viktor Orban.  Expectations are for Economy Minister Gyorgy Matolcsy to get the job, paving the way for an extended easing cycle. Swaps markets are currently pricing some 100 basis points of rate cuts over the coming six months in Hungary — the question is, could this go further? With tomorrow’s meeting to be the last by incumbent Andras Simor, clues over future policy are unlikely, but analysts canvassed by Reuters reckon interest rates could fall to 4.5 percent by the third quarter, compared to their prediction for a 5 percent trough in last month’s poll.

Weekly Radar: Bernanke, Berlusconi and bumps on the road

February 21, 2013

Financial markets have had one of those weeks of frenetic activity when each asset class blames the other for driving direction, few agree on an overall driver and it’s hard to square relative moves.  What seems to be true is that idiosyncratic and locally-focussed factors are back in vogue – witness the lunge in sterling as the BoE nods at more QE and higher inflation, or the sudden dive in commodities even as global stock markets nudged 5-year highs. Micro or national issues are getting more play as the stress busting of recent months seems to have reduced cross-market correlations  that characterised every ebb and flow of the overarching ‘global crisis’ for years.

Emerging Policy: Turkey bakes

February 21, 2013

Turkey took another step in the currency battle this week, cutting two of its three main interest rates to prevent speculative flows, yet also raising reserve requirements to cool domestic loan growth.

Deluxe growth as Chinese buy posh

February 20, 2013

By Stephen Eisenhammer

Luxury brands are set to grow further in 2013, as the sector continues to dodge the fallout from stalling European and U.S. economies by appealing to consumers in emerging markets such as Brazil, China and the Middle East.

Bond investors’ pre-budget optimism in India

February 18, 2013

Ten-year Indian bond yields have fallen 30 basis points this year alone and many forecast the gains will extend further. It all depends on two things though — the Feb 28 budget of which great things are expected, and second, the March 19 central bank meeting. The latter potentially could see the RBI, arguably the world’s most hawkish central bank, finally turn dovish.

Russian companies next stop for Euroclear

February 18, 2013

The excitement continues over Russian assets becoming Euroclearable.   Euroclear’s head confirmed last week to journalists in Moscow that corporate debt would be the next step, potentially becoming eligible for settlement within a month. Russian equities are set to follow from July 1, 2014.

LIPPER: Aux armes, millionaires!

February 15, 2013

(This post has been corrected to reflect a change in the information supplied by Cantab Capital Partners in the fourth paragraph. The Core Macro Fund management fee does not cover back office fees, while the fund does carry a high water mark)