In Brazil, rate cuts but no economic recovery
Brazil’s central bank meets today and almost certainly will announce another half point cut in interest rates, the eighth consecutive reduction since last August. But so far there is little sign that its rate-cutting spree – the longest and most aggressive in the developing world – is having much success in resuscitating the economy.
HSBC’s closely watched emerging markets index (EMI), released this week, shows Brazil as one of the weak links in the EM growth picture, with sharp declines in manufacturing and export orders in the second quarter.
European equities finding some takers
European equities are getting some investor interest again.
As the ongoing debt crisis erodes consumer spending and corporate profits, the euro zone’s share in investors’ equity portfolios has fallen in the past year –Reuters polls show holdings of euro zone stocks at 25 percent versus over 36 percent a year back. Cash has fled instead to U.S. stocks, opening up a record valuation gap between the European and U.S. shares. (see graphics below from my colleague Scott Barber). In fact no other region has ever been considered as cheap as the euro zone is now, a monthly survey by Bank of America/Merrill Lynch found in June.
That could offer investors a powerful incentive to return, especially as there are signs of serious efforts to tackle the crisis by deploying the euro zone’s rescue fund.
Manufacturing slows emerging market growth
LONDON (Reuters) – Economic growth across emerging markets eased in the second quarter of 2012, dragged down by lacklustre manufacturing sector activity, especially in China and Brazil, an HSBC survey showed on Wednesday.
HSBC’s emerging markets index (EMI), based on 21 service and manufacturing sector surveys in 16 emerging economies, slipped to 53.0 in the second quarter of the year. It stood at 53.6 in the first three months of 2012.
Manufacturing slows emerging market growth – HSBC survey
LONDON, July 11 (Reuters) – Economic growth across emerging
markets eased in the second quarter of 2012, dragged down by
lacklustre manufacturing sector activity, especially in China
and Brazil, a survey showed on Wednesday.
HSBC’s emerging markets index (EMI), based on 21 service and
manufacturing sector surveys in 16 emerging economies, slipped
to 53.0 in the second quarter of the year. It stood at 53.6 in
the first three months of 2012.
Yield-rich emerging bonds enjoy first-half boom
LONDON, June 28 (Reuters) – Emerging market borrowers have
already met most of their 2012 external fundraising targets half
way through the year and are on course for an annual
debt-raising record,
They are benefit ting from investors favouring debt over
equity and developing markets over the troubled euro zone.
Egypt tops emerging equities in H1; BRICs weak
LONDON, June 28 (Reuters) – Egyptian stocks topped returns
on emerging equity markets in the first six months of 2012 with
a rise of 30 percent, well above the broader MSCI emerging stock
index, where spectacular first quarter gains crumbled under the
impact of the euro crisis.
MSCI’s dollar-based emerging equity index has
fallen 1 percent in the first six months of 2012, after dropping
more than 20 percent in 2011.
Greece faces ejection from top equity league
LONDON, June 21 (Reuters) – Crisis-racked Greece has become
the first country to face the threat of relegation to emerging
market status from the elite league in MSCI’s equity indices,
although the index provider said on Thursday any such move is
unlikely before 2014.
Analysts reckon moreover that any downgrade would happen
only if Greece exits the euro, a scenario the country’s new
coalition government is keen to avoid.
Greece on review for move to emerging markets
LONDON (Reuters) – Greece has been placed on review for relegation to emerging market status by index provider MSCI, which would make it the first country to be thrown back out of developed equity indices.
Analysts, however, reckon any such relegation would only happen if Greece were to exit the euro zone.
Gabon may pay delayed bond coupon soon
LONDON (Reuters) – Investors awaiting a delayed coupon on Gabon’s $1 billion Eurobond may soon be paid as a South African company that had frozen bond payment funds via a court order said on Wednesday it was close to resolving its dispute with the government.
This is the second time Gabon, one of the few sub-Saharan African countries to have issued dollar bonds, has been forced to delay payouts to bondholders. In 2008 a payment was made several days late after the funds were frozen in London by a third-party creditor.
New Egyptian crisis threatens currency, finances
LONDON (Reuters) – The dissolution of the Egyptian parliament elected after last year’s overthrow of veteran general Hosni Mubarak has alarmed investors who fear the country will now hurtle towards a balance of payments crisis and currency collapse.
Growth in North Africa’s biggest economy has flatlined in the 16 months since the toppling of Mubarak’s 30-year regime. Currency reserves have halved, undermining the value of the Egyptian pound and troubling external creditors who are owed almost $6 billion in the current financial year.
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