LONDON (Reuters) – Falling oil prices and rate cuts in Europe are giving emerging market central banks the green light to ease their own monetary policies but investors are fearful that political pressure may be prompting some shifts in stance.
Already fragile trust in policymaking in some countries is being tested by central bank actions and the demands of politicians such as Turkish President Tayyip Erdogan for deeper and faster rate cuts.
LONDON, Jan 29 (Reuters) – After a golden decade of
improvement, credit ratings for a swathe of developing economies
risk falling back to “junk”, with huge potential costs for up to
a tenth of outstanding emerging market bonds.
Many mainstream investment and pension funds have rules
preventing them from holding debt unless it is classified as
investment grade by at least two of the big ratings agencies,
and a number of countries are at risk due to problems ranging
from tumbling commodity export prices to political instability.
LONDON, Jan 29 (Reuters) – Belarus sovereign bonds fell up
to 27 cents in the dollar on Thursday on fears of debt
restructuring, while broader emerging markets also weakened
following a U.S. Fed statement that boosted the dollar.
Belarus yield spreads over Treasuries widened 900 basis
points to 1463 bps and its 2015 and 2018 bonds were sold
off after President Alexander Lukashenko said the country may
have to consider restructuring.
LONDON, Jan 28 (Reuters) – The Nigerian naira plumbed new
record lows on Wednesday on weaker oil prices and fears of
election-linked turmoil, while most other emerging currencies
also retreated on expectations of monetary easing.
Broader emerging markets were range-bound with a weaker bias
before a meeting of the U.S. Federal Reserve which many expect
to signal a delay in monetary tightening amid signs that a
stronger dollar is hurting U.S. corporate profits.
LONDON, Jan 26 (Reuters) – Big pension, insurance and
sovereign funds that kept faith with emerging markets during the
massive selloffs of 2013 and 2014 may be starting to waver,
potentially depriving the sector of a key source of support.
While emerging markets are a tiny part of the assets of
these institutional investors, anecdotal evidence from flow
patterns and global asset managers suggests allocations have
risen in recent years.
LONDON/BUDAPEST (Reuters) – Hungarian Prime Minister Viktor Orban has long irritated European Union partners with economic policies that have burned foreign banks operating in Hungary. They may find his triumph in this month’s Swiss franc episode a bitter one.
Unorthodox measures – dubbed Orbanomics – have included a 2011 repayment scheme to relieve Hungarian families of costly Swiss franc-denominated mortgages at the expense of the banks, most of which were foreign owned.
LONDON, Jan 22 (Reuters) – Ukraine’s sovereign dollar bonds
slumped on Thursday after the government said it would seek
talks with bondholders to “improve debt sustainability”,
interpreted by many as a call to restructure the debt.
The comments by Finance Minister Natalia Yaresko are being
seen as a call for creditors to write down some of Ukraine’s
debt as the country looks set to get a bigger and longer-term
financing facility from the International Monetary Fund
LONDON, Jan 16 (Reuters) – The Polish zloty and stocks
extended losses on Friday after the Swiss franc’s surge against
central European currencies fanned financial stability fears,
though Hungarian assets stabilised.
More broadly, emerging equities were set to snap a four-week
winning streak, with the currency market turbulence
preventing the sector from benefiting from the fall in U.S.
LONDON, Jan 15 (Reuters) – The collapse in prices for copper
will deal a blow to emerging economies from Chile to Congo that
are reliant on exports of the metal, with currencies and
economic growth likely to bear the brunt.
Copper has tumbled to six-year lows this week,
sending shockwaves through global markets that are just coming
to terms with oil’s 60 percent price slide since June. Worst hit
are likely to be Chile and Peru, the world’s top and third
largest copper producers respectively.
LONDON, Jan 15 (Reuters) – Capital flows to emerging markets
will decline in 2015 for the second year in a row due to the
prospect of higher U.S. interest rates, a global finance
industry body said on Thursday, predicting inflows of $1.06
The Washington DC-based Institute of International Finance
(IIF) said in a report that total private sector investment
flows to emerging markets fell last year to $1.1 trillion, $250
billion less than the 2013 record high of $1.35 trillion.