Investment strategy Correspondent
Sujata's Feed
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.

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.