LONDON (Reuters) – Emerging market bulls who had reckoned on a boost from euro zone policy easing are instead facing an incipient rise in U.S. bond yields that threatens to wipe out any support from the ECB.
The European Central Bank is expected to drive one of its main interest rates into negative territory and boost liquidity on Thursday as it grapples with the threat of deflation and a stubborn economic funk in the euro zone. If that doesn’t work, it may even pump in billions of euros via bond-buying, an option almost unthinkable a year ago.
LONDON, June 3 (Reuters) – Emerging sovereign dollar bonds
traded at the lowest yield premia to U.S. Treasuries since
February 2013 on Tuesday, while inflation optimism helped India
and Turkey outperform in local currency debt markets.
Most emerging assets were rangebound, however, taking off
the Chinese government’s recent stimulus announcements and
better economic data in stride. Instead, focus was on U.S.
Treasury yields, which rose above 2.5 percent for the first time
in a week.
LONDON, June 2 (Reuters) – Banks fearful of wide-ranging
Iran-style U.S. sanctions in retaliation for Moscow’s actions in
Ukraine are slashing their inventories of Russian assets to the
minimum, effectively freezing up the trade in its bonds.
In the short-term, that is an inconvenience for the funds
that may be seeking to dip back into Russian bonds after a huge
sell-off in March and April. But if the drought persists it
could threaten the ability of Russian borrowers to raise money
by issuing new securities in primary markets.
LONDON, May 29 (Reuters) – Kazakhstan’s Alliance Bank,
majority owned by the country’s sovereign wealth fund, said on
Thursday that talks with creditors had broken down on what would
be its second debt restructuring in four years.
The bank defaulted on debt in the aftermath of the global
financial crisis and restructured debt in 2010 but late last
year said it needed to recapitalise to restore profitability.
LONDON, May 27 (Reuters) – Russian stocks slumped 2 percent
on Tuesday and the rouble fell from four-month highs, leading
broad-based emerging market losses as flaring violence in
eastern Ukraine took the edge off optimism fuelled by smooth
The Ukraine vote yielded a clear win for confectionary
magnate Petro Poroshenko who has promised to seek a meeting with
Putin to establish stability in eastern Ukraine. The smooth
election also averts the immediate threat of fresh Western
sanctions against Russia.
LONDON, May 23 (Reuters) – Emerging equities headed for a
fourth straight week of gains on Friday, supported by optimism
over world growth though fears of election-related unrest in
Ukraine held the market near 6-1/2 month highs.
MSCI’s emerging equity index was flat and is about
10 percent off levels it was at when a May 22 2013 speech by
ex-Federal Reserve boss Ben Bernanke set off a tidal wave of
selling by warning of a reduction in U.S. money-printing.
LONDON, May 19 (Reuters) – Emerging stocks traded just off
recent 6-1/2 month highs on Monday, held back by a 1.4 percent
fall in China but buoyant sentiment lifted most bourses and
currencies to multi-month peaks.
While Indian stocks rose 1 percent they kept off recent
record highs. Russian markets hit levels unseen since March 3,
when parliament approved President Vladimir Putin’s right to
intervene militarily in Ukraine.
LONDON, May 16 (Reuters) – Egypt could tap global bond
markets after presidential elections due May 26-27, but should
the country be in dire need, it could seek aid from its wealthy
Gulf neighbours, finance minister Hany Kadiri Dimian said on
Political turmoil following the uprising that toppled
autocrat Hosni Mubarak in 2011 has hammered the economy of 85
million people as foreign investors and tourists have fled.
LONDON/MUMBAI May 15 (Reuters) – With emerging equity funds
positioned for a business-friendly outcome to India’s election,
any further boost for the pumped-up stock market may come from
global funds whose India allocation still has room to grow.
Election results due on Friday are expected to reveal a
strong mandate for the opposition BJP, seen as more pro-business
than its rivals. Those expectations have fuelled year-to-date
stock market gains of 14 percent and a 4 percent rise in the
rupee’s exchange rate against the dollar.
ISTANBUL/LONDON May 14 (Reuters) – Turkey’s shrinking
current account deficit, its improved policy credibility and an
all-out hunt for yield are steadily pushing the lira, one of
last year’s emerging-market laggards, towards the key 2 per
The lira appreciation is likely to be short-lived. Turkey
still relies on external funding; political unrest could yet
erupt during upcoming elections. But for the time being, global
and domestic factors are working in its favour.