Category Archive: Emerging Markets

Main Author Win Thin
Win Thin
Win Thin is a senior currency strategist with over fifteen years of investment experience. He has a broad international background with a special interest in developing markets. Prior to joining BBH in June 2007, he founded Mandalay Advisors, an independent research firm that provided sovereign emerging market analysis to institutional investors. He received an MA from Georgetown University in 1985 and a B.A. from Brandeis University 1983. Feel free to contact the Zurich office of BBH

Emerging Market Preview: Week Ahead

EM FX ended the week firm, and capped off a good week overall. Best performers last week for ZAR and KRW, while the worst were TRY and IDR. Until we get higher US rates, the dollar may remain under modest pressure. This would help EM maintain some traction, though we remain cautious.

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Emerging Markets: What has Changed

Moody's raised India's sovereign debt rating for the first time since 2004 by a notch to Baa2. Nigerian officials are on a global roadshow to support plans to issue its longest-dated Eurobonds ever. The head of South Africa’s budget office resigned.

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Emerging Markets: Week Ahead Preview

EM FX closed the week on a soft note. For the week as a whole, best performers were MYR, PLN, and COP, while the worst were BRL, ZAR, and INR. US inflation and retail sales data will likely set the tone for EM. Also, the US fiscal debate is set to continue this week, so expect lots of choppy trading across many markets.

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Emerging Markets: What has Changed

China announced that it will remove foreign ownership limits on banks and other measures to open up the financial sector. Central Bank of Turkey lowered commercial bank FX reserve requirements in an effort to support the lira. US-Turkey relations appear to be thawing slightly. Middle East tensions are rising on a variety of fronts. Argentina central bank unexpectedly hiked rates again.

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Emerging Markets: Week Ahead Preview

EM FX ended the week under pressure. News of the Venezuela debt restructuring was digested well, but sentiment went south as the day wore on. Weakness was concentrated in the weakest links TRY, BRL, RUB, and ZAR, while MXN and COP were dragged along for the ride. We see EM selling pressures persisting into 2018.

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Emerging Markets: What has Changed

Russia’s Finance Ministry announced plans to increase its dollar. purchases in November. Bahrain has reportedly asked its Gulf allies for financial assistance. S&P upgraded Argentina a notch to B+ with stable outlook. Brazil raised BRL6.15 bln ($1.9 bln) by auctioning off the rights to explore 6 of the 8 deep-water oil blocks. Venezuela bowed to the inevitable, announcing that it would have to restructure its debt.

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Emerging Markets: What has Changed

EM FX gained some limited traction Friday but still capped off another awful week. So far this quarter, the worst EM performers are TRY (-6%), MXN (-5%), ZAR (-4%), COP, and BRL (both -2.5%). We expect these currencies to remain under pressure as political concerns are unlikely to dissipate anytime soon.

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Emerging Markets: What has Changed

President Xi Jinping’s concepts of socialist thinking were written into China’s constitution. Malaysia Prime Minister Najib presented an expansionary budget for 2018 ahead of elections. Czech billionaire Andrej Babis’ ANO party won the elections. South Africa's mid-term budget statement acknowledged the deteriorating outlook but offered little in the way of solutions. Press reports suggest Germany is working to cut funding for Turkish banks.

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Emerging Markets: Week Ahead Preview

EM FX ended the week on a soft note. Indeed, nearly every EM currency was down for the entire week, led by ZAR, BRL, and TRY. While higher US rates will pressure EM FX as a whole, we think heightend political risk will continue to hit these three currencies particularly hard, plus perhaps MXN too.

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Emerging Markets: Preview of the Week Ahead

EM FX closed the week on a firm note, as softer than expected US CPI data weighed on the dollar. We continue to believe that investors are underestimating the Fed’s tightening potential. Meanwhile, idiosyncratic political risk remains high for MXN, TRY, and ZAR.

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Emerging Markets: What has Changed

Thailand announced general elections will be held in November 2018. Czech police filed criminal charges against ANO leader Andrej Babis. South Africa President Zuma may face corruption charges that were previously dropped. The US suspended visa services for travelers from Turkey. Kenyan opposition candidate Odinga withdrew from a redo of the annulled presidential election. Saudi Arabia will take a more gradual approach to removing fuel subsidies....

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Emerging Markets: Week Ahead Preview

EM FX ended the week under pressure, as US data points to a rate hike in December and perhaps more in 2018. FOMC minutes this Wednesday will be closely studied for clues. US retail sales and CPI data Friday will also be important. We believe the most vulnerable currencies in this environment are ZAR and TRY, but one could also add MXN and perhaps RUB to that mix too.

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Emerging Markets: What has Changed

In the EM equity space as measured by MSCI, China (+4.1%), South Africa (+3.2%), and Hungary (+2.4%) have outperformed this week, while Egypt (-2.8%), Qatar (-2.7%), and Mexico (-1.7%) have underperformed. To put this in better context, MSCI EM rose 1.9% this week while MSCI DM rose 0.6%.

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Emerging Markets: Preview of the Week Ahead

EM FX firmed Friday, but capped off a bad week overall. US jobs data this Friday is unlikely to provide much clarity on Fed policy, though we think it remains on track to hike again in December. The Fed’s balance sheet reduction will start this month. We remain negative on EM, and believe selling pressures are likely to persist in Q4.

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Emerging Markets: What has Changed

India Prime Minister Modi announced an INR163.2 bln program to deliver electricity to all households. Poland’s President Duda is trying to reach a compromise on judicial reforms. Fitch raised the outlook on Russia’s BBB- rating from stable to positive. Saudi Arabia announced it will remove the ban on women driving. South Africa’s biggest labor organization stepped up its opposition to President Zuma.

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Emerging Markets: Week Ahead Preview

EM FX was mostly firmer on Friday, but capped off a week of broad-based losses. US rates gave back some of post-FOMC rise, and that weighed on the dollar. Not much in the way of US data until Friday’s core PCE reading and Chicago PMI.

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Emerging Markets: What has Changed

China plans to issue its first USD-denominated bond since 2004. China’s largest banks banned North Koreans from opening new accounts. The UN Security Council approved new sanctions on North Korea. Relations between Poland and the European Commission remain tense. Brazil’s central bank appears to be signaling discomfort with ongoing BRL strength.

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Les «diamants de sang» zimbabwéens circulent librement sur les marchés internationaux. La Tribune

L’ONG britannique Global Witness vient de publier ce 11 septembre un rapport explosif qui met à nu des opérations de détournement des revenus du secteur minier zimbabwéen par l’élite militaire et politique du pays pour financer les opérations répressives du régime du président Mugabe.

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Emerging Markets: Preview for the Week Ahead

EM FX ended the week on a mixed note, but still capped off a strong week overall. US data this week could challenge the market’s dovish take on the Fed. For now, though, the global liquidity outlook still seems to favor further gains in EM.

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Emerging Markets: What has Changed

South Korea completed installation of the THAAD missile shield. Indonesia is considering issuing its first global IDR-denominated sovereign bonds. Taiwan is undergoing a cabinet shuffle. Brazil has seen some positive political developments. Brazil’s central bank signaled that the easing cycle is nearing an end and that the pace of easing will slow. Chile’s central bank boosted its growth forecasts.

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