May 12, 2017 | Emerging Markets
Liquidity conditions have deteriorated meaningfully for EM equities. The left chart below shows that the steep drop in G7 Excess Liquidity points to a risk of much lower EM equity prices in about 3-4 months’ time. This materially worse backdrop for EM equities is...
Dec 16, 2016 | Emerging Markets
In the past few monthlies we’ve warned that a strong dollar has the potential to cause emerging market crises. From a valuation standpoint, the dollar is very overvalued against almost all currencies, but rising interest rates and the appreciating momentum may drive...
Nov 18, 2016 | Emerging Markets
(from our Tactical report of 8th November 2016) Flows to EM equities have been high lately (3m flows over last 2 years to EM ETFs are in their 80th percentile – chart below). Source: Macrobond, Bloomberg and Variant Perception The rise in the USD is a risk to these...
Dec 3, 2015 | Emerging Markets
Capital outflows from emerging markets continued into the second quarter of 2015. Once again the outflows mainly emanated from China and from CEE and Russia. The flipside is growth Treasuries held in custody for foreign accounts is stuck at zero percent. This is a...
Aug 5, 2015 | Emerging Markets
We discussed in April that global reserve assets had begun to fall on an annual basis. This has continued, and the level of contraction is now as great as it has been since at least 2004. Capital flight from EM is gathering pace as growth slows and fear mounts over...
Jan 14, 2015 | Asia, Emerging Markets
A weak oil price and a strong dollar rally will put pressure on emerging markets, but valuations for many emerging markets should soon be compelling. Emerging markets have been in a downtrend relative to the S&P since 2010. We will likely see further weakness...
Jan 28, 2014 | Emerging Markets, Featured, Global Economy, Tactical
Emerging markets are being blamed on just about all hiccups and bad surprises currently befalling the global economy and financial markets. However, this is slightly unwarranted and, in any case, not consistent with the evidence. Out of the 9 equity markets up on the...
Dec 17, 2013 | Emerging Markets, Featured, Global Economy, US Economy
One of the points we have emphasized to clients in the past two months is that many of our indicators suggest that long rates in the US may not rise as aggressively as the consensus expects. In other words, the Fed might stay more dovish than the market expects and...
