EM Preview for the Week Ahead

blog-icons-empreview emerging markets previewEM FX ended last week on a firm note, shrugging off political risk that consumed markets earlier in the week.  With US rates remaining low, the dollar remains under pressure against the majors, and so EM FX is likely to benefit also.  Yet we warn investors not to jump back into EM countries that are inherently riskier, such as Brazil, South Africa, and Turkey.  We continue to favor Asia in the current environment.
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What Has Changed in EM

  • IconChina’s government approved the creation of a bond link between Hong Kong and the mainland
  • S&P upgraded Indonesia one notch to investment grade BBB- with stable
  • Fitch revised the outlook on Vietnam’s BB- rating from stable to positive
  • Egypt will announce a package of social spending soon
  • Moody’s changed the outlook on Poland’s A2 rating from negative to stable
  • Brazil press reported that meat-packing company JBS has submitted compromising tape recordings to the Supreme Court
  • Chile central bank surprised markets with a 25 bp cut but signaled a move to a neutral bias Continue reading

What Has Changed in EM

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  • Moon Jae-in was elected president of South Korea
  • Philippine President Duterte named Nestor Espenilla as central bank governor
  • Nigerian President Buhari traveled to London for a follow-up to the initial medical visit earlier this year
  • Market expectations for 2018 inflation in Brazil rose for the first time in more than a year
  • Peru’s central bank unexpectedly started the easing cycle with a 25 bp cut to 4.0% Continue reading

Mexico’s Outlook Remains Cloudy

new mexico

While markets are no longer panicking about Mexico, the outlook for the nation remains cloudy.  The economy is slowing even as price pressures rise, while oil prices are sinking due to supply concerns.  Political risks will likely pick up as the 2018 elections approach. Continue reading

South Korea Goes to the Polls

New Korea

Korea will vote Tuesday for the next president to replace impeached Park Geun-hye.  Moon Jae-in is the frontrunner and would herald a change from nine years of conservative rule, which could upend North-south relations as well as the role of the chaebol.  Continue reading