Investment strategy Correspondent
Sujata's Feed
Mar 12, 2014

Investors shun emerging-market shares as profit squeeze lingers

LONDON, March 10 (Reuters) – An unrelenting squeeze on
company profits is turning investors away from emerging equity
markets, which look set to underperform their richer peers for a
fourth straight year.

The 3 percent loss by emerging equities this year contrasts
with 1 to 2 percent gains by developed and U.S. stocks, after a
divergence in performance of almost 30 percent in 2013.

Mar 12, 2014
via Global Investing

No more “emerging markets” please

The crisis currently roiling the developing world has revived a debate in some circles about the very validity of the “emerging markets” concept. Used since the early 1980s as a convenient moniker grouping countries that were thought to be less developed — financially or infrastructure-wise or due to the size or liquidity of their financial markets — the widely varying performances of different countries during the turmoil has served to underscore the differences rather than similarities between them.  An analyst who traveled recently between several Latin American countries summed it up by writing that he had passed through three international airports during his trip but had not had a stamp in his passport that said “emerging market”.

Like this analyst, many reckon the day has come when fund managers, index providers and investors must stop and consider  if it makes sense to bucket wildly disparate countries together.  After all what does Venezuela, with its anti-market policies and 50 percent annual inflation, have in common with Chile, a free market economy with a high degree of transparency  and investor-friendliness?

Mar 10, 2014
via Global Investing

Indian shares: disappointment may lurk

Should Indian shares really be at record highs?

The index is up 3.6 percent this year. Foreign funds have been pouring money into Mumbai shares, betting that the opposition BJP, seen as more reform-friendly than the incumbent Congress, will form the next government. They purchased $420 million worth of Indian stocks last Friday, having bought $1.4 billion over the past 15 trading sessions.

There is also the fact that the rolling crisis in emerging markets, having smacked India during its first round last May, has now moved on and is ravaging places such as Russia and Nigeria instead. The rupee has firmed almost 2 percent this year to the dollar, as last year’s 6.5 percent/GDP current account deficit has contracted to just 0.9 percent of GDP.  Many international funds such as Blackrock and JPMorgan Asset Management have Indian stocks on overweight and Bank of America/Merrill Lynch’s monthly survey showed investors’  underweight on India was one of the smallest for emerging markets.

Mar 10, 2014

Weak Chinese data hurts emerging stocks, knocks India off highs

LONDON, March 10 (Reuters) – Emerging stocks fell 1 percent
on Monday, pulled down by poor Chinese economic data that
re-ignited concerns of slowdown in the world’s No. 2 economy and
pushed Chinese shares to a five-year closing low.

Chinese mainland shares fell more than 3 percent
and the losses rippled across emerging markets, dragging the
main emerging equity benchmark off six-week highs hit
last week.

Mar 7, 2014

India leads emerging stocks higher; Ukraine fears ease

LONDON, March 7 (Reuters) – Indian shares rallied to record
highs on Friday on hopes of a market-friendly outcome to
upcoming elections, leading broader emerging equities to
six-week highs ahead of key U.S. jobs data.

Investors are awaiting the U.S. payrolls numbers that could
provide clues about the pace at which the U.S. Federal Reserve
reduces monthly bond-buying. But there was some relaxation in
recent market tensions over Ukraine, where many had feared the
outbreak of fully-fledged war with Russia.

Mar 5, 2014

Ukraine bonds fall as restructuring mooted; investors weigh options

LONDON, March 5 (Reuters) – Ukraine’s short-dated dollar
bonds plunged by as much as 6 cents on Wednesday after the
country’s finance minister said it may start talks with
creditors on restructuring debt, though Western aid pledges
helped prices to recover.

Ukrainian bond prices have been under pressure for weeks
despite prospects of a multi-billion dollar International
Monetary Fund bailout, as the state of the country’s economy and
the sheer weight of debt repayments made a restructuring likely.

Mar 4, 2014

Russian, Ukrainian assets bounce as immediate tensions ease

LONDON, March 4 (Reuters) – Russian equities, bonds and the
rouble soared on Tuesday and Ukraine’s assets rallied after
Russian moves that investors took as a sign of an easing in
East-West tensions.

Russian President Vladimir Putin said Moscow would only use
force in Ukraine “as a last resort” after ordering troops
involved in a military exercise in western Russia back to base.

Mar 4, 2014
via Global Investing

More development = fewer violent deaths in India

A recent report highlights the importance of economic development for India and indeed for all developing countries. It also shows why we should worry about the slow pace of reform in India and how that has hit growth rates.

Bank of America/Merrill Lynch analysts have picked up a report from the Institute for Conflict Management, a New Delhi-based think tank, showing that terrorism-linked deaths in India last year were 6 times lower than in 2001, a development they ascribe to the rapid growth the country enjoyed in this period. The graphic below shows the link:

Mar 4, 2014

Russian assets lead bounce by emerging markets

LONDON, March 4 (Reuters) – Russian equities and the rouble
led gains across emerging markets on Tuesday, amid hopes that a
further escalation of the Crimean crisis could be averted.

Regional assets enjoyed across-the-board gains after
President Vladimir Putin ordered troops involved in a military
exercise in western Russia back to base. Russian stock rose 3.6

Mar 3, 2014

Russian power play risks full-scale investor exodus

LONDON (Reuters) – Russia’s power play for Ukraine’s Crimea region is putting to flight foreign stock and bond investors, who are rattled by the Kremlin’s overruling of the country’s economic interests in favor of its military ambitions.

Russia’s half-trillion dollars in central bank reserves mean its creditworthiness is not in doubt, and political risk has always been part of the game while investing in Russia.