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.
LONDON (Reuters) – International investors need not worry about South Africa’s future when senior statesman Nelson Mandela eventually dies, as his legacy will be safeguarded, Planning Minister Trevor Manuel said on Monday.
The 94-year old Mandela, the country’s first black president, is critically ill with a lung infection, a huge concern for South Africa’s 53 million people who revere him as the architect of peaceful transition to democracy in 1994 after three centuries of white rule.
LONDON (Reuters) – An independent panel set up by the World Bank to look at the validity of one of its highest profile country reports said on Monday the Bank should stop producing headline rankings because they may be misleading.
The Bank’s annual “Doing Business” report judges 185 countries on 10 criteria and compiles an index on the ease of doing business, assigning each country a rank. The rankings can carry huge weight with governments.
LONDON, June 21 (Reuters) – A decade of improvement in
emerging market credit ratings is coming to an end as higher
borrowing costs and commodity price falls threaten to lay bare
many countries’ failure to reform during the good times.
Between 2007 and 2012 emerging economies earned almost 200
rating upgrades from the three main agencies, nearly half of
them promotions to the top ‘investment grade’ category.
LONDON, June 21 (Reuters) – Emerging markets lost more
ground on Friday, with stocks set for their biggest weekly loss
in just over a year and central banks from Korea to Russia
wading in to stem currency falls against a resurgent dollar.
The MSCI index for emerging market stocks fell a
further 0.5 percent after the previous session’s 4 percent drop,
the biggest daily loss since September 2011 as the U.S. Federal
Reserve outlined plans to wind down its $85 billion-a-month
asset-buying programme and Chinese data confirmed a sharp
slowdown in the world’s second biggest economy.
LONDON, June 20 (Reuters) – Stocks and bond prices plunged
and debt insurance costs soared in a general flight from
emerging markets on Thursday, after the U.S. Federal Reserve
laid out a timetable for turning off the taps on its $85
billion-a-month bond-buying programme.
The MSCI emerging stock index was down by over 3.3
percent, hitting its lowest level since July 2012 and heading
for its biggest one-day fall since Oct 2011, with weekly losses
of more than 6 percent, as U.S. 10-year Treasury yields
surged to 15-month highs.