Emerging Markets: BBH Market Strategists provide intra-day commentary on currency, economic and geopolitical developments in the emerging and frontier markets.
We continue to see divergences within EM. CLP and TRY underperformed last week, while MXN and ZAR outperformed. Rather than seeing EM-wide buying, investors are being much more discerning and that is a good thing at this stage of the rally. Korea and Taiwan report trade data this week that should support our view that emerging Asia is likely to outperform, pulled up by the recovery in mainland China. Continue reading “EM Preview for the Week Ahead”
Market Themes Update In this piece we revisit some of the themes discussed in our Q3 Risk Map and flesh out our views on some emerging themes. In short: (1) we are on the optimistic camp regarding the risk of … Continue reading Market Themes Update
• Since our last model update on November 14, our proprietary EM equity portfolio is up 7.7% and outperforming MSCI EM, which rose 4.9%
• Our 1-rated grouping (outperformers) for Q3 2020 consists of Korea, Hungary, China, Qatar, and Turkey
• Our 5-rated grouping (underperformers) for Q3 2020 consists of Pakistan, Argentina, India, Mexico, and South Africa
• EM has rallied sharply in recent weeks, helped by growing optimism that we’ve seen the worst of the pandemic
• MSCI EM FX has lagged, retracing only half of this year’s drop before running out of steam
By Dara O’Sullivan and Ilan Solot As the week commences, we see minimal change to market status. With the pandemic continuing to wreak havoc around the globe markets such as Pakistan resume normal operating hours. Nigeria continues to experience liquidity … Continue reading Restricted Market Trading Comments
The dollar got some traction against the majors towards the end of last week. This weighed on EM FX, with the high best currencies TRY, BRL, CLP, and ZAR leading the losers. We downplay risk of contagion from Turkey, but we acknowledge it will keep investors wary of the countries with poor fundamentals. Failure to pass the next stimulus bill in the US may weigh on sentiment as the week begins.
INTRODUCTION We wrote back in May that “Turkey’s Desperate Moves Unlikely to Buoy the Lira.” Subsequent price action has borne this out and further TRY losses are likely. Policymakers now face a hard set of choices ahead, and most of … Continue reading Turkey Under Pressure (Again)
The major ratings agencies continue to downgrade sovereign ratings across both EM and DM. Our own sovereign ratings model suggests that there is still more pain to come.
EM currencies took advantage of broad dollar weakness against the majors last week, with most gaining against the greenback. Yet the week ended on a bit of a risk-off note as concerns intensified about the resurgent virus and the impact on the still-weak global economy. This sentiment may carry over into this week as markets await final July global PMI readings earlier in the week and key US jobs data Friday. Continue reading “EM Preview for the Week Ahead”