Market sentiment rallied last week on a lot of unsubstantiated claims by President Trump regarding China trade talks. At best, we know there is no further escalation (for now). At worst, the two sides remain far apart, and a deal is unlikely until 2020. That’s no reason to load up on EM. As long as current and planned tariffs are in effect, global growth risks will remain high and EM will…
2 Sep 2019
The US-China trade war is extending and expanding. There is no longer any semblance of a truce, and this is unequivocally negative for EM. CNY, INR, SGD, MXN, and BRL are making new cycle lows, and many other EM currencies are likely to follow suit.
27 Aug 2019
EM is likely to remain under pressure. Despite some signs of a slight thaw in US-China relations, a trade deal remains far off and so global growth and trade are likely to see continued downside risks.
19 Aug 2019
EM is likely to remain under pressure as US -China relations remain strained. Despite his claims that things are going “very well”, President Trump admitted that the September talks might be cancelled. This is very negative for EM, which saw some stability towards the end of last week.
12 Aug 2019
EM remains under severe pressure. The less dovish than expected Fed, renewed trade tensions, and a broad-based dollar rally have conspired to absolutely crush EM FX and equities. These drivers are likely to carry over into this week and so we remain bearish on EM.
5 Aug 2019
In the face of relatively abundant banking sector liquidity and stabilising oil prices, CFOs and treasurers have rightly questioned the need to shift their funding focus away from the region’s deep-pocketed lenders. With the global growth outlook looking more uncertain, new trade wars becoming a near daily feature of the global policy discussion, and in light of recent moves to bolster the…
2 Aug 2019
Central and Eastern European sovereign bond markets came to life in the second quarter of 2019, a period that saw a sharp rise in traditional US dollar borrowers – and investors – switching into euro notes across the region. The dynamic reflects a tangible recovery in EM debt sales amidst the ECB’s and the Fed’s dovish tilt, but just how long the hunt for yield will prevail is far from clear.
29 Jul 2019
Last week’s dovish tilt by the ECB should have been EM-supportive. However, global trade tensions remain high despite the rebooted US-China talks in Shanghai this week and so we remain bearish on EM. China reports July PMI readings, and the first glimpse of the world’s second-largest economy in H2 are expected to show continued softness.
29 Jul 2019
While global and domestic investors looking at South Africa remain preoccupied with Eskom’s woes or the country’s lacklustre economic performance, many will have missed the impressive bounce-back in local currency capital market volumes after a trying and volatile 2018.
25 Jul 2019
EM central banks remain in easing mode, as the US-China trade war continues to have ripples across global markets. Reports suggest little progress has been seen, suggesting headwinds to global growth will continue through much of H2. We remain negative on EM, as the liquidity story (both domestic and global) is not enough to offset the uncertain global growth story.
22 Jul 2019