Setback to Turkish Recovery

Having appeared to have passed the worst of the economic crisis, Turkey has faced a fresh bout of turbulence in recent weeks. We have revisited our framework for identifying buying opportunities following an EM crisis to gauge Turkey’s position on the recovery path....

Use Risk Rally to buy Default Protection

This post was taken from our March 5th weekly report. In line with rebounding equity markets following the 4Q18 correction, credit risk-premia have compressed sharply. This is particularly notable for the big political risk plays of 2018. UK CDS spreads have narrowed...

Capital Committed to EM for the time being

In an almost textbook fashion, a stronger dollar and rising US rates has triggered a broad emerging market sell-off and surge in volatility. However, somewhat atypically there is little evidence so far of foreign capital bolting for the exit, despite the gradual...

EM Credit Risk faces Repricing

Credit risk in emerging markets has long been mispriced as the impact of unprecedented monetary stimulus and record low policy rates seemingly placated concerns about higher leverage. However, with the rise in US rates claiming its first casualties (Argentina and...

Understanding EM Crises

  We recently published a new white paper on EM Crises. In this report, we look at the history of EM crises. How they unfold, and when they become buying opportunities. EM crises have generated some of the largest market sell-offs in the last 25 years. At the same...

Turkey: A Recipe for Inflation

On a structural basis, Turkey has consistently been one of the most vulnerable economies to a currency crisis in light of considerable external vulnerabilities, and was flagged again in VP’s September thematic update of our debt and currency crisis framework. However,...

Emerging Markets: Turkey and Mexico Beaten Up

One of the main promises of Trump’s campaign was building a wall with Mexico that the Mexicans would pay for as well as renegotiating NAFTA.  Mexico’s stock market in dollar terms is now back to 2009-10 levels.  Investors are pricing in an awful lot of bad news. ...