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Sun, 22nd January 2017

Anirudh Sethi Report

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Archives of “Antonin Scalia” Tag

Emerging Markets -An Update

Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term.
Korea’s parliament voted 234-56 to impeach President Park.
Czech National Bank raised the possibility of negative rates to help manage the currency.
A Brazilian Supreme Court justice removed Senate chief Renan Calheiros from his post, but was later overturned by the full court.
Brazil central bank signaled a possibly quicker easing cycle.

In the EM equity space as measured by MSCI, UAE (+6.2%), Poland (+6.0%), and Mexico (+5.9%) have outperformed this week, while Czech Republic (-0.6%), Hong Kong (-0.2%), and China (+0.6%) have underperformed.  To put this in better context, MSCI EM rose 2.8% this week while MSCI DM rose 2.8%.
In the EM local currency bond space, Brazil (10-year yield -60 bp), the Philippines (-59 bp), and Indonesia (-40 bp) have outperformed this week, while India (10-year yield +20 bp), China (+5 bp), and Czech Republic (-1 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 3 bp this week to 2.41%. 
In the EM FX space, BRL (+3.1% vs. USD), COP (+2.9% vs. USD), and CLP (+2.8% vs. USD) have outperformed this week, while EGP (-2.3% vs. USD), CNH (-0.8% vs. USD), and SGD (-0.7% vs. USD) have underperformed.
Hong Kong Chief Executive Leung Chun-ying said he won’t seek a second term.  He cited family reasons.  The next chief executive will be selected in March by a committee of 1,200.  China has veto power over the final selection, and so it’s clear that another establishment leader will be chosen.