Should South Africa’s central bank — the SARB – strike first with an interest rate hike before being forced into it? Gill Marcus and her team started their two-day policy meeting today and no doubt have been keeping an eye on happenings in Turkey, a place where a pre-emptive rate hike (instead of blowing billions of dollars in reserves) might have saved the day.
The SARB is very different from Turkey’s central bank in that it is generally less concerned about currency weakness due to the competitiveness boost a weak rand gives the domestic mining sector. This time things might be a bit different. The bank is battling not only anaemic growth but also rising inflation that may soon bust the upper end of its 3-6 percent target band thanks to a rand that has weakened 15 percent to the dollar this year.
LONDON (Reuters) – A well-orchestrated statement from G20 finance chiefs this week could go some way towards defusing the volatility of global markets surrounding the end of U.S. money printing, but probably not the markets’ direction.
Strategists and investors have grown inured against over-inflated expectations of G20 meetings ever since it conducted a dramatic global economic rescue in early 2009.
LONDON (Reuters) – China’s vast market for foreign goods and services, once seen by global companies as a modern-day El Dorado, is becoming a weight around their necks as its growth slows.
The rise of the Chinese economic “dragon” over the last two decades has transformed international business. But now the country is in the grip of a slowdown due to a slump in exports and banking sector excesses, as recent data has shown.
LONDON, July 14 (Reuters) – China’s vast market for foreign
goods and services, once seen by global companies as a
modern-day El Dorado, is becoming a weight around their necks as
its growth slows.
The rise of the Chinese economic “dragon” over the last two
decades has transformed international business. But now the
country is in the grip of a slowdown due to a slump in exports
and banking sector excesses, as recent data has shown.
LONDON, July 11 (Reuters) – Foreign investors sitting on
losses of 5-15 percent in Turkey are likely to cut and run
without a swift and substantial interest rate rise to stabilise
the plunging lira.
Foreign fund managers have yanked around $3 billion from
Turkish stocks and bonds since the last week of May, central
bank data shows, reversing only a tiny part of the investment
inflows the country has received in recent years.
LONDON (Reuters) – Egypt’s crumbling public finances may be in even worse shape than previously estimated.
While stock and bond markets have cheered the ouster of unpopular President Mohamed Mursi by the army and Egypt’s debt insurance costs have tumbled, data shows that financial risks are about to escalate.
For an investor in emerging equities the best strategy in recent years has been to take a contrarian stance, says John-Paul Smith at Deutsche Bank.
Smith, head of emerging equity strategy at Deutsche, has been bearish on emerging stocks since 2010, exactly the time when bucketloads of new cash was being committed to the asset class. Investors who heeded his advice back then would have been in the money — since end-2010 emerging equities have underperformed U.S. equities by almost 40 percent, Smith pointed out a couple of months ago.
Glass half full or half empty? For emerging markets watchers, it’s still not clear.
Last month was a record one in terms of net outflow for funds dedicated to emerging equities, Boston-based agency EPFR Global said. Debt funds meanwhile saw a $5.5 billion exodus in the week to June 26, the highest in history .
LONDON, June 28 (Reuters) – A firmer dollar and rising U.S.
yields are fuelling a steady increase in money market rates
across emerging economies where many central banks could be
forced to raise interest rates to stem an investor exodus.
For a sector whose high growth rates and burgeoning consumer
demand were the prime draw for trillions of dollars in
investment, this effective tightening in monetary conditions,
months before the U.S. Federal Reserve even starts reducing its
money-printing, could prove a huge blow.
LONDON, June 28 (Reuters) – Investment funds dedicated to
emerging market equities have posted record monthly outflows in
June, shedding their entire year-to-date takings, banks said on
Friday, citing data from EPFR Global.
It was the fifth straight week of outflow for equity funds
which lost $5.6 billion in the week ended June 26, according to
the Boston-based fund tracker which releases weekly data to
clients late on Thursday.