LONDON, July 25 (Reuters) – Foreign equity and bond
investors who had tentatively ventured back into Russia after a
huge early-2014 selloff are again slashing their holdings for
fear of being caught in the crossfire of Western sanctions.
Russia has fared worst among the big emerging equity markets
this year, with dollar-based losses of 13 percent.
We’ve written (most recently here) about all the buying interest that emerging markets have been getting from once-conservative investors such as pension funds and central banks. Last year’s taper tantrum, caused by Fed hints about ending bond buying, did not apparently deter these investors . In fact, as mom-and-pop holders of mutual funds rushed for the exits, there is some evidence pension and sovereign wealth funds actually upped emerging allocations, say fund managers. And requests-for-proposals (RFPs) from these deep-pocketed investors are still flooding in, says Peter Marber, head of emerging market investments at Loomis Sayles.
The reasoning is yield, of course, but also recognition that there is a whole new investable universe out there, Marber says:
LONDON, July 22 (Reuters) – Russian stocks snapped a six-day
losing streak on Tuesday after signs pro-Moscow rebels in
Ukraine were cooperating with investigations into a downed
passenger, jet while broader emerging equities surged to
The other major gainer of the day was Saudi Arabia, where
the main bourse index jumped 3.2 percent to a six-year
high after regulators said they would open the market to direct
foreign investment, a move that could bring the country into
mainstream equity indexes next year.
LONDON, July 21 (Reuters) – Russian markets, under the
shadow of new sanctions, slumped 1.4 percent on Monday,
extending last week’s 5 percent slide, while UAE property stocks
came under renewed pressure, hit by troubled building company
The increasingly deadly conflict between Israel and
Gaza-based militants, fighting in eastern Ukraine and new
sanctions on Russia over its perceived role in the Ukraine
crisis were capping further advances in global equities, with
MSCI’s emerging index half percent off recent 16-month highs
LONDON, July 18 (Reuters) – New types of long-term investors
and flexible, “go-anywhere” investing styles are helping
transform emerging markets by making the once-volatile sector
less prone to the sweeping sector-wide sell-offs common in the
Consider recent events. Macedonia and South Africa
successfully tapped bond markets on July 17, as buyers turned a
blind eye to the ongoing Russian bond rout caused by U.S.
sanctions and the bringing-down of a passenger plane on its
border with Ukraine.
LONDON, July 16 (Reuters) – Fear of new economic sanctions
pushed Russian equities to new five-week lows on Wednesday,
while broader emerging stocks held off recent 16-month highs
after hawkish noises from the Federal Reserve boosted U.S.
While Fed Chair Janet Yellen stressed that the inflation
picture was not enough to accelerate anticipated interest rate
hikes, she also hinted that an unexpected improvement in the job
market could lead to faster rate rises than are currently priced
LONDON, July 14 (Reuters) – Hard currency reserves across
emerging markets excluding China have surged by around $100
billion from levels at the end of 2013 as central banks exploit
this year’s buoyant investment inflows to refill their depleted
With an eye on the day when U.S. interest rates eventually
start to rise, policymakers in emerging economies are actively
buying dollars. They see them as a bulwark against the kind of
selloff that ravaged their markets last year due to signs that
the U.S. bond-buying programme could soon be wound down.
Emerging markets have been attracting healthy investment flows into their stock and bond markets for much of this year and now data compiled by consultancy CrossBorder Capital shows the sector may be on the cusp of decisively turning the corner.
CrossBorder and its managing director Michael Howell say their Global Liquidity Index (GLI) — a measure of money flows through world markets — showed the sharpest improvement in almost three years in June across emerging markets. That was down to substantially looser policy by central banks in India, China and others that Howell says has moved these economies “into a rebound phase”.
LONDON, June 30 (Reuters) – Emerging market borrowers sold
over $260 billion worth of bonds in the first half of 2014,
outstripping year-ago levels despite geopolitical noise as
borrowers rushed to take advantage of lower-than-expected U.S.
The hard currency debt market was hampered by the
Ukraine-Russia conflict and a sharp fall in Russian bond sales.
But a 50-basis-point fall in U.S. 10-year yields, the benchmark
for most emerging debt, has more than made up for the
A colleague of mine, Marius Zaharia (@MZaharia) interviewed Moritz Kraemer, Standard and Poor’s head of sovereign ratings for Europe, Middle East and Africa. (you can read the interview here) Kraemer offered this piece of advice to the African governments who are busily tapping bond markets these days:
What I want to tell all those governments in africa is that you are not a successful market participant when you’ve issued your first eurobond. You are a successful participant when you’ve paid it back for the first time.