Investment strategy Correspondent
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Nov 5, 2014

Oil price tumble highlights performance divide in emerging markets

LONDON, Nov 5 (Reuters) – Oil’s tumble to new four-year lows
on Wednesday prompted a heavy selloff of stocks and bonds in
energy-producing emerging markets from the Middle East to
Russia, while importer countries like India enjoyed the prospect
of cheaper fuel.

Expectations that the oil price will remain weak is creating
a sharp divergence between emerging markets that export energy
and those that import, with asset managers starting to shift
investments to the latter.

Nov 4, 2014

Emerging energy exporters’ bonds tumble as oil hits 4-yr lows

LONDON, Nov 4 (Reuters) – Tumbling oil prices fuelled a
heavy fall in the dollar bonds of energy exporting emerging
nations on Tuesday, with Venezuela and Ecuador leading the pack
as investors fretted about their ability to repay debt.

Ecuador’s yield spreads over U.S. Treasuries – a measure of
the premium investors demand to hold a credit relative to
safe-haven U.S. Treasuries blew out 33 basis points on the EMBI
Global bond index of emerging debt to 523 bps

Nov 3, 2014

Emerging stocks off 5-wk highs on China data, firmer dollar

LONDON, Nov 3 (Reuters) – Emerging equities and currencies
started the week on a sour note on Monday, hit by the dollar at
four-year highs, lacklustre Chinese data and a possible fresh
flare-up in tensions over Ukraine.

Russian stocks fell in a holiday-thinned trading session,
while the rouble slipped another 0.8 percent versus the dollar
as a controversial poll in Eastern Ukraine added to
pressure from domestic factors.

Oct 31, 2014

Rouble volatility jumps to record 20 pct after rate rise

LONDON, Oct 31 (Reuters) – One-month implied volatility on
the rouble – a gauge of expected swings in a currency – surged
to new record highs on Friday, as the spot exchange rate
shrugged off an outsize 150 basis-point interest rate rise to
resume its slide.

The Russian currency’s relentless depreciation in recent
weeks was abruptly halted on Thursday and it rallied more than
3 percent ahead of the central bank decision. But the
rouble resumed its slide after Friday’s rate rise.

Oct 31, 2014

Investors pull back from stocks in October as Fed money-printing ends

LONDON (Reuters) – Equity holdings in global portfolios dipped to the lowest in more than a year in October as lingering caution about world growth and central bank policies prompted European, U.S. and British funds to trim allocations.

A monthly survey of 46 investment houses from the United States, Japan, continental Europe and Britain showed on Friday that the average recommended allocation to equities in global balanced portfolios had slipped to 49.5 percent, more than one percentage point lower than in September.

Oct 30, 2014

Emerging assets mostly weaker post-Fed, rouble bears brunt

LONDON, Oct 30 (Reuters) – Emerging markets mostly fell on
Thursday after the U.S. Federal Reserve set the clock ticking on
its first interest rate rise in almost a decade, with a surging
dollar taking an especially heavy toll on currencies.

Russia, hurt by its own domestic woes, continued its run as
the worst performing market, with the currency falling to a
record low against the dollar.

Oct 29, 2014

Assets broadly firmer; rouble hits record low

LONDON, Oct 29 (Reuters) – Emerging stocks rose to
three-week highs on Wednesday, buoyed by gains in China and
expectations of a dovish U.S. Fed stance though the positive
mood did not touch Russia where the rouble hit another record

The Zambian kwacha was the other loser of the day, falling
more than 2 percent after the death of President Michael
Sata though it later pared losses on hopes that elections would
bring in a more investor-friendly leader.

Oct 28, 2014

Rousseff’s win in Brazil raises questions about EM reforms

LONDON (Reuters) – Pledges of reform in emerging markets have encouraged investors this year, but Brazil’s vote against any change at the top of its government is raising questions over whether the reforms will be delivered in hyped-up markets like India and Indonesia.

Leftist Dilma Rousseff won re-election as Brazil’s president by a slim margin over business favorite Aecio Neves. Her Workers’ Party is credited with lifting 40 million Brazilians out of poverty, but investors want to see bold pro-business measures to reverse the country’s deepening economic funk.

Oct 17, 2014
via Global Investing

Strong dollar, weak oil and emerging markets growth

Many emerging economies have been banking on weaker currencies to revitalise economic growth. ¬†Oil’s 25 percent fall in dollar terms this year should also help. The problem however is the dollar’s strength which is leading to a general tightening of monetary conditions worldwide, more so in countries where central banks are intervening to prevent their currencies from falling too much.

Michael Howell, managing director of the CrossBorder Capital consultancy estimates the negative effect of the stronger dollar on global liquidity (in simple terms, the amount of capital available for investment and spending) outweighs the positives from falling oil prices by a ratio of 10 to 1. Not only does it raise funding costs for non-U.S. banks and companies, it also usually forces other central banks to keep monetary policy tight, especially in countries with high inflation or external debt levels. Howell says:

Oct 15, 2014

Kazakhstan’s Alliance Bank says near completion of debt restructuring, merger

LONDON (Reuters) – Kazakhstan’s Alliance Bank ALLBy.LU, majority owned by the country’s sovereign wealth fund, is close to completing a $1.2 billion debt restructuring and a merger with two other banks, its chief executive said on Wednesday.

Timur Issatayev, who has been meeting creditors in London and New York, told Reuters he was confident of getting the go-ahead at creditor and shareholder meetings due in coming weeks.