Posts Tagged: emerging markets

BRICS to Create Own Parliamentary Assembly

26 February 2015 - 18:51 pm
 

BRICS leaders

A parliamentary assembly of the BRICS countries, namely Brazil, Russia, India, China and South Africa, could be established in the near future on Russia’s initiative, the Izvestia newspaper reported Thursday, citing a source familiar with the situation.

 The issue will reportedly be discussed during the upcoming trip to India by Russian State Duma Speaker Sergei Naryshkin and Foreign Affairs Committee Chairman Alexei Pushkov.

“We will begin cooperation to establish a parliamentary assembly of the BRICS countries. This will be one of the issues that will be discussed there,” the source told Izvestia.

Naryshkin and Pushkov will be joined by Russia’s Deputy Finance Minister Sergei Storchak, who oversees the creation of a new bank within the BRICS framework, on their visit to New Delhi, according to the source.

 Pushkov declined from passing detailed comment on the source’s statements, but confirmed to Izvestia that Russia is set to “strengthen and give new impetus to inter-parliamentary cooperation within the BRICS format.”

The BRICS group of prominent emerging economies was established in 2010, when South Africa joined Brazil, Russia, India and China in what was previously known as BRIC.

10 worst performing stock markets in 2014

24 December 2014 - 13:58 pm
 

10. Malaysia – Bursa Malaysia stock exchange

Loss in 2014: -10pc

How to access this market: The best route to this stock market is via the iShares MSCI Malaysia ETF, which tracks the up and down movements of shares listed in Malaysia. 

9. Mexico – Bolsa Mexicana de Valores SAB de CV stock exchange

Loss in 2014: -12pc

How to access this market: One option is to buy a fund that has a significant chunk of its money in Mexican shares, such as the Blackrock Latin American Investment trust, which has around 30pc of its money in the country. Alternatively there is SPDR MSCI Mexico Quality Mix ETF and the iShares MSCI Mexico Capped ETF. 

8. Brazil – Bovespa stock exchange >> Read More

 

The US Federal Reserve has pulled the trigger. Emerging markets must now brace for their ordeal by fire.

They have collectively borrowed $5.7 trillion in US dollars, a currency they cannot print and do not control. This hard-currency debt has tripled in a decade, split between $3.1 trillion in bank loans and $2.6 trillion in bonds. It is comparable in scale and ratio-terms to any of the biggest cross-border lending sprees of the past two centuries.

Much of the debt was taken out at real interest rates of 1pc on the implicit assumption that the Fed would continue to flood the world with liquidity for years to come. The borrowers are “short dollars”, in trading parlance. They now face the margin call from Hell as the global monetary hegemon pivots.

The Fed dashed all lingering hopes for leniency on Wednesday. The pledge to keep uber-stimulus for a “considerable time” has gone, and so has the market’s security blanket, or the Fed Put as it is called. Such tweaks of language have multiplied potency in a world of zero rates.

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The US Federal Reserve has started to wean the US economyoff phantom money, euphemistically called “quantitative easing” (QE). Reserve Bank of India (RBI) GovernorRaghuram Rajan has been apprehensive about its potential impact on emerging economies like India. He made a vocal plea for a globally co-ordinated monetary policy action, ostensibly after due consideration of the impact of global capital flows on emerging economies. The then fellow at Peterson Institute Arvind Subramanian together with Princeton University economist Dani Rodrik, through an article in this paper (“Emerging Markets’ Victimhood Narrative,” February 1, 2014) pointed to the disingenuity of such claims of victimhood. They argued how emerging markets “consciously and enthusiastically embraced financial globalisation” to soak up foreign capital flows during times of easy money and contended that emerging markets are “simply reaping what they have sown”.

Over the next few weeks and months, as the tide of US capital flows run out, naked swimmers in emerging economies could be exposed, (the tangible impact of Bank of Japan’s renewed benevolence in flooding the market with liquidity is still unclear). Amid such bay watching, this is yet another opportunity for policymakers in emerging economies to assess reliance and susceptibility of various sectors in their economy to foreign flows. In this context, the badge of honour for dependence on foreign capital flows in the Indian economy can be bestowed on our equity markets. Analysis of all factors such as gross domestic product (GDP) growth, interest rates, domestic institutional investor (DII) flows, foreign institutional investor flows (FII), corporate earnings and so on that typically move stock markets, reveals that FII flows alone explain movement in the BSE Sensex since 2000.

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Unilever, the consumer goods giant whose business depends on discretionary spending in developed and emerging countries, has said it can fight off difficult economic conditions to produce robust growth this year.

The maker of Dove personal care products and Ben & Jerry’s ice cream said in the outlook statement accompanying its third quarter results that:

We are confident that we will achieve another year of profitable volume growth ahead of our markets, steady and sustainable core operating margin improvement and strong cash flow.

Its third quarter sales rose 2.1 per cent on a like-for-like basis, compared to the same time last year.

Its strongest trading was in the US, where sales advanced by 6.8 per cent. Europe was weak, however, with sales falling by 4.3 per cent.

Investors had been fearing a more pessimistic update from Unilever ever since finance director Jean-Marc Huët said at an event last month that global market growth had slowed and emerging markets had worsened.

Just over a year ago, Unilever became the first consumer goods maker to warn on emerging markets sales growth.

 

The 100-day moving average of the advance/decline ratio for the MSCI World Index has collapsed to its lowest level since November 2008.

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 Out of the 46 MSCI country indices, we count 20 countries where the 100-day moving average of the advance/decline ratio is at its lowest level since 2008 or below it.

Below are charts for the MSCI World Index and MSCI Emerging Markets Index as well as our top 10 worst advance/decline country charts.

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The world economy is threatened by a “new mediocre” of low growth for a long time, warned Christine Lagarde as she signalled cuts to the global outlook for 2015.

Ms Lagarde, the managing director of the International Monetary Fund, said in a speech on Thursday that the global economic recovery is “brittle, uneven and beset by risks,”

Her remarks highlight a steady weakening of the global outlook in recent months as emerging economies, in particular, suffer a slowdown that threatens to dampen already sluggish growth in advanced countries as well.

“Overall, the global economy is weaker than we had envisaged even six months ago,” Ms Lagarde told an audience at Georgetown University. “Only a modest pickup is foreseen for 2015, as the outlook for potential growth has been pared down.” >> Read More

 

Emerging markets are heading for their ninth straight day of losses, the longest streak of declines since September 2001, as nervousness over the possibility of US rate hikes and slower Chinese growth mount.

The FTSE Emerging Index of developing market bourses has suffered steeper slides – most notably in the “taper tantrum” jitters of January and last summer, and at the depths of the eurozone and global financial crises – but the uninterrupted nature of this month’s slump is almost unprecedented.

Today FTSE’s flagship EM index fell another 0.6 per cent, led by bourses in Asia. Latin American exchanges have yet to open.

The gauge has only slid for 10 consecutive days once in its two-decade history – in August 1998, when a profound crisis across the developing world led to the default of Russia and a host of Asian countries.

Emerging stock markets have still enjoyed reasonable returns this year, with the FTSE index up 6.7 per cent, and the recent slide is partly a natural correction after the gauge hit a two-year high earlier this summer. >> Read More

 

The world is facing a global jobs crisis that is hurting the chances of reigniting economic growth and there is no magic bullet to solve the problem, the World Bank warned on Tuesday.

In a study released at a G20 Labour and Employment Ministerial Meeting in Australia, the Bank said an extra 600 million jobs needed to be created worldwide by 2030 just to cope with the expanding population.

“There’s little doubt there is a global jobs crisis,” said the World Bank’s senior director for jobs, Nigel Twose.

“As this report makes clear, there is a shortage of jobs — and quality jobs. >> Read More

African Countries -New BRICS

20 August 2014 - 11:34 am
 

The emerging market slowdown is affecting some countries worse than others, with comparatively resilient growth in African and the Middle East now attracting serious attention from the financial salesmen whose job it is to keep the investment dollars flowing.

Brazil and Russia’s growth has been especially sluggish since emerging markets boomed in 2004-2008, according to data supplied by London research consultancy Capital Economics.

And while emerging Asia remains the fastest growing developing region, “growth has held up best in in the Middle East and Africa,” Capital Economics economist Daniel Martin finds.

That will be music to the ears of those bankers and consultants who are currently fishing out old China research notes from 2006, substituting the word “Africa” throughout.

Africa is the next frontier for emerging market investors, according to some analysts, because the development of the middle class is expected to lift off.

>> Read More

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Technically Yours,
Team ASR,
Baroda, India.