Investment strategy Correspondent
Sujata's Feed
Dec 2, 2013

Analysis: Emerging markets seek savers at home as foreign money drains away

LONDON (Reuters) – As a decade’s worth of easy foreign money starts to ebb away from emerging economies, their governments are renewing efforts to deepen domestic savings pools – even if change is painfully slow.

The volatility prompted by signs of an eventual turn in U.S. monetary policy has not only underscored emerging markets’ reliance on foreign capital, but also sounded a fresh warning: that without a significant home-grown investor base, countries risk a return to the old boom-bust cycles of the 20th century.

Dec 2, 2013

Emerging markets seek savers at home as foreign money drains away

LONDON, Dec 2 (Reuters) – As a decade’s worth of easy
foreign money starts to ebb away from emerging economies, their
governments are renewing efforts to deepen domestic savings
pools – even if change is painfully slow.

The volatility prompted by signs of an eventual turn in U.S.
monetary policy has not only underscored emerging markets’
reliance on foreign capital, but also sounded a fresh warning:
that without a significant home-grown investor base, countries
risk a return to the old boom-bust cycles of the 20th century.

Dec 2, 2013
via Global Investing

Perfect storm brewing for the rouble

A perfect storm seems to be brewing for the Russian rouble. It has tumbled to four-year lows against a euro-dollar basket. Against the dollar, it has lost around 7 percent so far this year, faring better than many other emerging currencies. But signs are that next year will bring more turmoil.

While oil prices, the mainstay of Russia’s economy, are holding up, Russian growth is not. It is running at 1.3 percent so far this year and capital outflows continue unabated — $48 billion is estimated to have fled the country in the first nine months of 2013 compared with $55 billion in 2012. Russia’s mighty current account surplus has shrunk to barely nothing and could fall into deficit by the middle of next year, reckons Alfa Bank economist Natalia Orlova. Finally, the rouble can no longer count on the central bank for wholehearted day-to-day support. FX market interventions cost the bank $3.5 billion last month  but it also shifted the exchange-rate corridor upwards six times, indicating it is keen to move to a fully flexible currency.

Nov 27, 2013
via Global Investing

Revitalised West knocks Brazil, Russia off global growth Top-30

By Shadi Bushra

Yet another sign of the growth convergence between developed and emerging markets. Two  of the “BRIC’ countries have dropped out of the Top-30 in a growth index compiled by political risk consultancy Maplecroft, while several Western powerhouses have nudged their way onto the list.

Maplecroft’s 2014 Growth Opportunities Atlas showed that Brazil and Russia — the B and R of the BRIC bloc — had dropped 26 and 41 places, respectively – due to slow economic reforms and diversification.  The United States, Australia and Germany meanwhile broke into the top 30 on the  index, which evaluates 173 countries on their growth prospects over the next 20 years.

Nov 27, 2013

Greek stocks rise on first day of EM trade

LONDON, Nov 27 (Reuters) – Greek stocks made their trading
debut on MSCI’s emerging equity index on Wednesday after a
12-year gap, rising 1 percent on the back of European gains,
though broader emerging stocks were subdued after mixed U.S.
data signals.

Earlier in Asia too the picture was mixed, with Chinese
shares rallying but the Indonesian and Thai currencies extending
losses, the latter hit by political turmoil and an unexpected
interest rate cut.

Nov 25, 2013

Turkey, India lead gains after Iran deal

LONDON, Nov 25 (Reuters) – Turkey’s stock market surged 1.6
percent on Monday after Iran sealed a historic nuclear deal with
the West read as reducing political risk in the oil-producing
Middle East and opening the door to more trade with one of the
region’s biggest countries.

While emerging markets were generally firmer, political
tensions weighed on Thai and Ukrainian assets, and oil’s 3
percent dip pushed the Russian rouble lower.

Nov 22, 2013

Analysis: Counting the cost of currency risk in emerging bond markets

LONDON (Reuters) – Once a source of rich returns for yield-hungry investors, emerging markets are hammering home a long-ignored truism: banking on currency strength to enhance returns on stocks and bonds is not a one-way ticket to profits.

Currencies such as the rupiah and lira have slumped 10-20 percent this year as a seismic shift in global capital flows rattles even relatively robust markets, exacerbating international investors’ losses on the underlying assets.

Nov 22, 2013

Counting the cost of currency risk in emerging bond markets

LONDON, Nov 22 (Reuters) – Once a source of rich returns for
yield-hungry investors, emerging markets are hammering home a
long-ignored truism: banking on currency strength to enhance
returns on stocks and bonds is not a one-way ticket to profits.

Currencies such as the rupiah and lira have slumped 10-20
percent this year as a seismic shift in global capital flows
rattles even relatively robust markets, exacerbating
international investors’ losses on the underlying assets.

Nov 19, 2013

Investec sees euro crisis flare-up risk; short French bonds vs Bunds

LONDON (Reuters) – Stagnant growth and possible deflation could trigger fresh upheaval in Europe next year, says Investec, which has short positions on peripheral bonds and expects European stocks to lag other developed equities in 2014.

Philip Saunders, Investec’s head of multi-asset investment business, told the Reuters Global Investment Outlook Summit on Tuesday that European equities would probably deliver positive returns next year but inflows of cash rotating from emerging and U.S. markets could soon dry up.

Nov 18, 2013
via Global Investing

Red year for emerging bonds

What a dire year for emerging debt. According to JPMorgan, which runs the most widely run emerging bond indices, 2013 is likely to be the first year since 2008 that all three main emerging bond benchmarks end the year in the red.

So far this year, the bank’s EMBIG index of sovereign dollar bonds is down around 7 percent while local debt has fared even worse, with losses of around 8.5 percent, heading for only the third year of negative return since inception. JPMorgan’s CEMBI index of emerging market corporate bonds is down 2 percent for the year.