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’Emerging loan demand
If you’ve ever wondered what a survey of senior lending officers in 45 emerging markets might look like (as opposed to, say, all those stagnant developed loan market surveys) here’s your chance.
The Institute of International Finance (IIF) has just released first-quarter data from its (enlarged) emerging markets lending conditions survey,
Greek bank risk – another New Europe tour
Greece debt restructuring chatter => Greece CDS blows out => peripheral sovereigns blow out with it. Usual stuff.
What’s wrong with this picture?
We think there’s something missing. Actually a whole group of sovereigns has been more or less absent lately…
EMs to IMF on capital controls: nice try
So much for learning to play nice.
According the Wall Street Journal on Monday morning, the tentative consensus on capital controls found last week has already unraveled (or was never there to begin with):
Going small(er) in emerging markets
Fresh from our inbox, a chart and some commentary from State Street Global Advisors:
According to the team’s research (see Chart one), since January 1997 BRICs have underperformed a group of smaller countries within the emerging world.
More on uncertainty and capital controls
In a previous post about the efficacy of capital controls, we interpreted a passage from Reinhart & Rogoff’s epic This Time is Different by saying “there remains an awful lot we simply don’t know about the consequences of capital flows,
[Gavyn Davies] Has global economic growth peaked?
Risk assets have not had a great month so far, with global equities now having eliminated most or all of the gains they recorded during January and February.
It is tempting to view recent setbacks as a natural response to the heightened uncertainty which has been caused by an extraordinary combination of exogenous shocks hitting the system.
Russia, the oil opportunist
From Nomura’s Jim McCormick, net exports of oil as a percentage of GDP for a range of emerging markets. No wonder Russia plans to sell that Eurobond on Thursday.
Citi’s new meme: 3G or ‘Global Growth Generators’
In a whopping report out Monday, Citi’s Willem Buiter and Ebrahim Rahbari call time on ‘Emerging Markets’ and ‘BRIC’ labels.
And not a moment too soon, we reckon.
Instead, the authors propose — you guessed it — a new meme:
The EM retreat continues
And so… the rotation out of EM equities into DM equities goes on.
Data from Citigroup:
So, in the week to February 16 outflows from emerging market funds totaled $5.45bn, up from $3bn just the week before.
Emerging resistance
Here’s a chart that might spook investors in emerging markets, at least those in equities:
It comes via RBC (HT FT Tilt), which in a new report lists a compendium of worries about EM asset classes for the first half of 2011:
Nomura calls the end of risk on/risk off
The last time Nomura talked ‘risk on/risk off’ they thought it had ruptured.
Now they think the market phenomenon — which had seen correlations intensify in recent (QEased and crisis-ed) years — might be ruined for good.
Private equity: tilting and growing (again)
Having duly warned you of the risks that come with private equity investing in emerging markets, it’s time to pass along EMPEA’s full-year 2010 statistics for EM investment and fundraising.
If the subject matter doesn’t get your juices flowing the way it does ours,
The hot money speaks on emerging markets
Efforts by emerging market governments and central banks to shut out hot money to protect their economies are doomed to fail – or so says the hot money.
Bart Turtelboom and Karim Abdel-Motaal, who run the emerging markets hedge fund at GLG,
Goldman kind of disagrees with the Fed on commodities inflation
Well, this is something of a surprise.
Just after Federal Reserve chairman Ben Bernanke told reporters on Thursday that US QE (I and II) does not cause higher food prices in places such as Egypt, Goldman Sachs’ Michael Vaknin publishes a note suggesting something rather different.
EU debt-drenched vs EM erratics
Bob McKee — he of Belgian-short fame — is back.
And the Independent Strategy economist reckons we’re in for quite a reversal — in emerging market risk. His argument, in a nutshell, is that risk appetite for all-things-EM has spun out of control recently.
Quantifying corruption risk in India
Egypt’s grabbed all the headlines in the ‘emerging market risk’ category so far this month, but there’s been a touch of controversy elsewhere in the EM category too.
India’s been rocked by a series of corporate and political scandals.
Will nothing deter Mrs Watanabe?
Mrs Watanabe — Japan’s famous retail currencies investor — laughs in the face of emerging market political instability. In fact, she laughs then invests some more.
From Yunosuke Ikeda at Nomura’s global FX team:
The 2015 banking crisis begins in commodities
John picked up the phone. It was the bank’s legal counsel, Peter Thompson, calling. He had dramatic news. Garland Brothers, one of the world’s oldest banks, would declare bankruptcy tomorrow. As he lay there in his spacious air-conditioned bedroom,
The Mubarak effect on equities
Things are moving fast in Egypt — especially in equity markets.
The EGX 30 was down 10 per cent on Thursday morning after protesters defied the Mubarak government’s ban on demonstrations. Trading on the North African nation’s stock exchange was even temporarily suspended.
Brics flip-floppery flimflammery
A tilt of the hat to our old friends for passing along this chart and commentary from Citigroup:
Global Emerging Markets — Long Big Countries
In 2011, our Global EM strategists expect their large markets to reverse last year’s underperformance.
Uncertainty and capital controls
Worries about capital flows and the potential side effects of poorly designed capital controls (trade wars, market inefficiencies and distortions) are all the rage these days.
But some economists are sceptical (here’s one) as to whether capital controls even work,
David Rosenberg’s cartoon-ish 2011
David Rosenberg’s gone all cartoony.
The Gluskin Sheff analyst seems to have given up on on words and is instead using charts — and Loony Tunes — to illustrate his (very salient) points.
The introductory text:
Indonesian equities warning du jour
One of these is not like the others — chart from Nomura fixed income analyst Owen Job, who’s making a point about Asian inflation risk:
Here’s what Job says (link and emphasis ours):
Recent market moves in Indonesia highlight the risks that inflationary pressures and attempted management of the impossible Trinity can have on asset prices.
Casualties of the currency war
This is ironic, Brazil.
That’s a Nomura chart showing the Brazilian government as the biggest ‘loser’ of the currency war. You know the war we’re talking about: Brazil was the first and loudest to declare it in 2010.
EM private equity: other things to worry about
Stephen Davidoff has an excellent overview in DealBook of the potential obstacles that US private equity firms should worry about as they increasingly look abroad.
They are:
– Carried interest taxes are higher,
Central bank mash-up, carry bash-up
China started it.
Quantitative tightening has been bandied about recently as the way in which the People’s Bank of China is combating QE. At a time when rate hikes may not be enough, other tools have to be considered for dealing with surging capital inflows in search of Chinese yield.
Danube flotsam, jetsam, and junk
This is another appeal to readers.
FT Alphaville has looked — and looked hard — for reasons to invest in Hungarian government bonds. We can’t find any. Nor can we quite see why Hungary isn’t among the European sovereigns being mauled by a bond market currently on the prowl.
Cross-border M&A and EM flows
Following this morning’s $4.1bn acquisition of Russia’s Wimm-Bill-Dann by Pepsi, Reuters updates the year’s international M&A numbers:
- Pepsi’s $4.1 billion acquisition of Russia’s Wimm-Bill- Dann brings the volume of US acquisitions in the emerging markets to $23.8 billion,