Investment strategy Correspondent
Sujata's Feed
Aug 16, 2013
via Global Investing

Russia — the one-eyed emerging market among the blind

It’s difficult to find many investors who are enthusiastic about Russia these days. Yet it may be one of the few emerging markets  that is relatively safe from the effects of “sudden stops” in foreign investment flows.

Russia’s few fans always point to its cheap valuations –and these days Russian shares, on a price-book basis, are trading an astonishing 52 percent below their own 10-year history, Deutsche Bank data shows.  Deutsche is sticking to its underweight recommendation on Russia but notes that Russia has:

Aug 6, 2013

Banks’ shrinking trade desks hit emerging debt volatility, fund says

LONDON, Aug 6 (Reuters) – Trade in emerging debt,
particularly corporate debt, is being hampered during times of
stress by bank regulation that has cut the number of market
counterparties, sapping liquidity, a senior fund manager says.

John Morton, head of emerging debt at BNP Paribas Investment
Partners, said banks’ shrinking proprietary trading desks were
struggling to cope with the needs of an expanding asset
management industry.

Aug 6, 2013

Turkey lira defence a lesson for India

LONDON (Reuters) – If the Reserve Bank of India wants some pointers on how to lift the rupee decisively off record lows, it could try asking Turkish central bank governor Erdem Basci.

The rupee tumbled to a new record low against the dollar on Tuesday, raising the stakes for the RBI, whose stop-start currency defence strategy is widely seen as inadequate.

Aug 6, 2013

Analysis: Turkey lira defense a lesson for India

LONDON (Reuters) – If the Reserve Bank of India wants some pointers on how to lift the rupee decisively off record lows, it could try asking Turkish central bank governor Erdem Basci.

The rupee tumbled to a new record low against the dollar on Tuesday, raising the stakes for the RBI, whose stop-start currency defense strategy is widely seen as inadequate.

Jul 19, 2013
via Global Investing

BRIC shares? At the right price

Is the price right? Many reckon that the sell off in emerging markets and growing disenchantment with the developing world’s growth story is lending fresh validity to the value-based investing model.

That’s especially so for the four BRIC economies, where shares have underperformed for years thanks either to an over-reliance on commodities, excessive valuations conferred by a perception of fast growth or simply dodgy corporate governance. Now with MSCI’s emerging equity index down 30 percent from 2007 peaks, prices are looking so beaten down that some players, even highly unlikely ones, are finding value.

Jul 17, 2013
via Global Investing

South Africa may need pre-emptive rate strike

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.

Jul 17, 2013

Anxious markets hoping for clear steer from G20 as dollar fears bite

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.

Jul 14, 2013

Analysis: Sting in dragon’s tail for foreign companies in China

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.

Jul 14, 2013

Sting in dragon’s tail for foreign companies in China

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.

Jul 11, 2013

Without Turkish rate rise, foreign investors may cut losses and run

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.