Investment strategy Correspondent
Sujata's Feed
Mar 21, 2014

Dirt-cheap Russian shares still no bargain

LONDON, March 21 (Reuters) – Around $70 billion has come off
the value of the Moscow stock exchange this month in response to
the Kremlin’s military incursion into Ukraine and its annexation
of Crimea, but it would be a brave investor who sniffs a

Even before the falls, Russian stocks were cheap, but with
Western sanctions now threatening growth, company profits and
credit ratings, and with Russian President Vladimir Putin
apparently ready to put geo-political ambitions above the
financial consequences, they could yet get cheaper.

Mar 18, 2014

Russian, emerging assets rise after Putin eases Ukraine fears

LONDON, March 18 (Reuters) – Russian stocks jumped 2 percent
and the rouble firmed up after President Vladimir Putin said on
Tuesday he did not want to see Ukraine divided any further, in
comments that also boosted other emerging assets.

The rouble, which had traded more than half a point weaker
against the dollar earlier in the day, reversed its losses and
approached the two-week highs hit on Monday, when Western
sanctions turned out to be less stringent than expected.

Mar 18, 2014

Russian stocks track emerging equities higher, rouble back in red

LONDON, March 18 (Reuters) – Russia’s rouble fell on Tuesday
from the previous session’s two-week highs on fears of fresh
economic sanctions and a further military standoff, though
Moscow equities firmed in line with other emerging markets.

Equities were generally stronger across emerging markets,
lifted by big gains in Indian and Korea, while Russian shares
extended the 3.6 percent rise posted on Monday after Western
sanctions were seen as milder than expected.

Mar 17, 2014
via Global Investing

Who shivers if Russia cuts off the gas?

Markets are fretting about the prospect of western sanctions on Russia but Europeans will also suffer heavily from any retaliatory trade embargoes from Moscow which supplies roughly a third of the continent’s gas needs  – 130 billion cubic metres in 2012.

After all, memories are still fresh of winter 2009 when Russia cut off gas exports through Ukraine because of Kiev’s failure to pay bills on time.  ING Bank analysts have put together a table showing which countries could be hardest hit if the Kremlin indeed turns off the taps.

Mar 17, 2014
via Global Investing

Iran: a frontier for the future

Investors trawling for new frontier markets have of late been rolling into Iran. Charles Robertson at Renaissance Capital (which bills itself as a Frontier bank) visited recently and his verdict?

It’s like Turkey, but with 9% of the world’s oil reserves.

Most interestingly, Robertson found a bustling stock market with a $170 billion market cap — on par with Poland – which is the result of a raft of privatisations in recent years.  A $150 million daily trading volume exceeds that of Nigeria, a well established frontier markets. And a free-float of $30 billion means that if Iranian shares are included in MSCI’s frontier index, they would have a share of 25 percent, he calculates.

Mar 17, 2014

Rouble touches new record low as sanctions loom; yuan falls

LONDON, March 17 (Reuters) – The rouble touched new lows on
Monday on fears of economic fallout from Russia’s standoff with
the West over Ukraine, while the yuan took its biggest daily
fall in three years after China widened its trading band.

Some Asian currencies hit multi-month highs to the dollar,
bucking the weaker yuan which fell half a percent in spot
exchange rate markets after the central bank widened its
trading band to 2 percent, signalling authorities may tolerate
more currency weakness.

Mar 13, 2014

Russian, Turkish currencies buck firmer emerging market trend

LONDON, March 13 (Reuters) – Emerging market shares and
currencies were broadly firmer on Thursday, shrugging off weak
Chinese economic data and focusing on a stronger yuan and more
stability on commodity markets.

The Russian and Turkish currencies were flat, however,
remaining under pressure as the former looked set to be hit by
Western sanctions and the latter was weighed on by escalating
domestic tensions before March 30 local elections.

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.