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’A Magyar martingale
(We mean martingale, the betting strategy, not the quant model!)
Here’s the thing about Hungary, as we see it anyway. If you look at things like the current account, for example, it says “fixable by the IMF”.
Hung out to dry in emerging Europe
Once upon a time foreign ownership of domestic banking sectors was deemed a “rating strength” in central and eastern Europe.
Before the financial crisis, foreign banks had demonstrated their willingness and ability to support their subsidiaries,
…And Justice for All (in emerging Europe)
CEE Banker: If everybody agrees I’m innocent, how come I’m going BACK to the market jailhouse? The ECB is guilty of failing to shore-up monetary conditions in the CEE!
European policy-maker: You are out of order! We have provided a liquidity backstop for eurozone banks that operate in the region!
CEE :
Norway doesn’t need no stinkin’ stress tests
The European Union’s banking stress tests cover 91 banks in 20 countries.
Seven of those financials are Nordic — but none of them are Norwegian.
Norway is of course, not a member of the EU, but it keeps close ties,
Who’s exposed to Hungary
Hungary may be frantically trying to backpedal its way out of the eyebrow-raising, and market-moving, comments made by some of its politicians and spokespeople last week.
But that hasn’t stopped JP Morgan from publishing a table of which European banks are most exposed to the country.
The scale of sovereign short-selling
The sovereign debt most targeted by short-sellers is not what you might expect, according to DataExplorers.
We’re not entirely sure of the methodology here, but the short-selling specialist has presented this interesting chart.
What a difference six months makes, in the CEE
In early 2009, central and eastern Europe (CEE) was the region “most blighted by the financial crisis”, as Lex reminded us last week. There were real concerns for foreign banks with big CEE exposure – above all from Austria,
Sovereign debt crises 2010, an RBS sapling
What is the `Tree of Truth’?
According to RBS, it is a Binary Recursive Tree Approach aimed at selecting explanatory variables and critical threshold levels that best discriminate between sovereign debt crisis and non-sovereign debt crisis states.
Managing CEE’s FX addiction
Here’s a great chart from Reuters showing just how addicted many countries in emerging Europe have become to borrowing in foreign currency for everything from second homes to TV sets :
As Reuters notes,
Banks’ coverage ratio capers, cont.
Look who’s jumped on the bad bank coverage ratio bandwagon — Goldman Sachs.
In a note out today, GS analysts, are also looking at how falling coverage of non-performing loans (NPLs) has fueled this year’s profits among European banks.
Emerging market datapoint(s) du jour
Still uncertain as to the relevance of all the fuss over tottering Eastern European, South American or Asian economies? Uncertainty begone. Says JP Morgan’s Joyce Chang, via Felix Salmon:
Total lending to emerging markets is now some $4.7 trillion.
The hills are alive with the sound of Austrian bond auctions
When Eastern Europe was experiencing a spot of difficulty back in the winter of 2009, we saw the crisis spillover into neighbouring of Austria.
Now that the spotlight is once again shining on the region,
Is Eastern Europe on the edge again?
Edward Hugh over at A Fistful of Euros draws our attention to the following warning over the Baltic region issued by Danske Bank on Thursday:
The event risk has risen sharply in the Baltic markets and we advise outmost caution.
The trouble with doorstep lending in emerging markets
Hindsight is a wonderful thing. But was there a bigger accident waiting to happen on the UK stock market than International Personal Finance?
For readers not familiar with the FTSE 250 company it is a doorstep lender with a twist:
The BTA Bank default – a portent of things to come in Eastern Europe?
The default by Kazakhstan’s BTA Bank, which triggered the first-ever CDS event on an emerging market company, may well be a sign of things to come in the former Soviet Union, according to Oleksiy Soroka at BNP Paribas.
IMF urges eastern EU to adopt euro
Crisis-hit European Union states in central and eastern Europe should consider scrapping their currencies in favour of the euro even without formally joining the eurozone, according to the International Monetary Fund.
Charting global fragility, 1997 and now
UBS is looking at country risk based on an aggregate of economic indicators.
The data includes credit/GDP ratios, loan/deposit ratios, current account balances, export exposure, public and external debt and FX reserves.
A ‘game-changer’ for the euro – and a coming CHF bloc
Morgan Stanley’s currency expert and emerging markets strategist Stephen Jen has been quick to leap on the significance of the push to give the IMF extra funds to channel to Eastern Europe. Citing what he calls a “game changer”
The Eastern European carry-trade meltdown, reviewed
As reported here previously, much of the panic surrounding western European exposure to CEE fragility was focused on a particular set of BIS figures, a number amounting to some $1,700bn ‘reflecting total foreign claims’ from the region.
Stress-testing Eastern Europe
Well, not Eastern Europe per se, but Western banks’ exposure to the region.
Merrill Lynch’s Global Economics team has done a bit of analysis (emphasis FT Alphaville’s):
A simplistic stress test on Emerging European exposure at listed Western European banks shows the potential for an incremental €13bn of losses.
Absolute suicide watch
We’re thinking of placing certain members of the alternative investment community under special supervision.
Take Niels C Jensen, one of eight leading lights at Absolute Return Partners. He introduces the latest monthly Absolute Return Letter thus:
CEE’s stand against SPECTRE-lators
The interesting thing about the Central and Eastern European crisis is how quickly it turned. Even six months ago, economists and city analysts were saying more established markets like Poland and the Czech Republic would sail through the financial crisis largely unscathed.
EU to CEE: ‘Non’
Writing on Friday ahead of the EU summit, Erik Berglöf, chief economist at the European Bank for Reconstruction and Development, said (our emphasis):
There is much to suggest that it was the belief that EU’s leaders will stand by Eastern Europe that prevented a full-blown meltdown last week.
Swiss struggles
The Swiss franc, along with Swiss banks, is taking a beating this morning.
In fact, RBC Capital Markets contend the currency is rapidly losing its safe haven status and decoupling from the US dollar.
EE meltdown averted, for now
The zloty is up vs most of its significant crosses (CHF, EUR, USD) for the second day in a row — largely down to Wednesday’s widely called-for intervention in the forex markets by the Polish finance ministry.
UBS: No Eastern European meltdown
UBS have appointed themselves defenders of the East, apparently. U B of ‘Save our Eastern Europe.’
They’re taking issue with recent reports of imminent EE/CE “meltdown”.
We don’t normally respond directly to articles in the financial press,
Domino theory, Eastern Europe edition
From today’s FT:
Ukraine’s name, by some accounts, means “at the edge” – which is where its economy finds itself today. Austria’s finance minister warned last week of the risk of an economic “catastrophe”
ERM, convergence might not work
When fear of foreign exchange exposure wrought havoc in Eastern European markets last October, the region’s chief saving grace was a ubiquitous commitment to accelerating its entry into the euro zone; this was particularly true of Poland and Hungary.
UniCredit’s Eastern Exposure
Moody’s Market Implied Ratings group has an interesting – and bearish – note out on UniCredit, highlighting concerns about the bank’s exposure to Central and Eastern Europe.
The note, written by analyst Lisa Hintz,
Another Eastern European meltdown?
Recent swiss franc strength has started to court some concern at the Swiss National Bank. Reuters reports SNB board member Thomas Jordan in particular voiced his worries on the swissie’s recent 7 per cent rise against the euro.