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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (113071)	8/26/2015 9:34:12 PM
From: carranza2	Respond to of 219831

We're doing pretty well, all considered. Crime and poverty are of course a problem; they go hand-in-hand. I hope our unique way of life doesn't become homogenized. Signs of it already - dog walkers in N.O.?

To: Snowshoe who wrote (113071)	9/1/2015 8:11:39 AM
From: elmatador	1 Recommendation Recommended By Hawkmoon Read Replies (1) \| Respond to of 219831

Investors wake up to emerging market currency risk Roger Blitz If there is a mood of anxiety across the US and Europe over the impact of China catching a cold, there is an air of déjà vu for investors who deal in emerging markets. The panicked market reaction to “Black Monday” in Chinese equities suggests much of the developed world has only just woken up to the risk that a slowing Chinese economy poses around the globe. But it is nothing new for EM countries. “The biggest surprise [about last week’s market panic] was not that China has slowed but that it’s come as such a surprise,” says Paul McNamara, EM portfolio manager at GAM Holding. China’s slowdown has been worrying EM countries throughout 2015. It has been a year of falling commodity prices, brought lower, thanks in part, to drip-drip evidence that the Chinese investment drive — which fuelled growth in commodity countries and investor interest in their economies — was being checked. Black Monday, says Mr McNamara, was “a pretty intense dose of what we’ve been seeing all year”. It has been a year of consistent weakness, “a lot of which has been sourced in China”. Take Colombia, a big oil producer. Its peso currency had fallen 24 per cent from the beginning of the year up until Black Monday, when it fell a further 4 per cent. EM countries have been pummelled by double blows to the solar plexus all through the year. Punch one: the Chinese slowdown. Punch two: the continuous market focus on when the US would raise rates, which has driven dollar strength and so weakened EM currencies. The result is a fall of one-fifth over the past 12 months in JPMorgan’s EM currency index. How much further can they fall? If fair valuation was an investor’s only benchmark, then for several EM currencies, the answer is: not much further. “EM currencies are now going from being overvalued to being close to fair value or dipping into undervalued territory,” says EEMEA strategist Arko Sen of Bank of America Merrill Lynch. It follows five years of easy money — the quantitative easing programmes of the US, Japan and now the eurozone — which distorted resource allocations in emerging markets, says Daniel Tenengauzer, head of EM FX strategy at RBC Capital Markets. “A rising dollar is part of a valuation adjustment that’s necessary in EM. Malaysia was very overvalued a year ago, it made a very significant adjustment and is now close to fair value. Mexico was about 5-10 per cent over. Now it’s under. “The vast majority [of EM currencies] are either close to fair value or are undervalued.” But fair valuation is not the investor’s only benchmark. As Mr Sen adds: “There’s not enough conviction to play [in EM currencies] even if they are undervalued. Valuations are quite interesting, but because of poor global risk sentiment, investors don’t want to take the risk.” Instead, they are doing the opposite. Stuart Oakley, Nomura’s head of EM FX, recognises that foreign capital has been “closing out and running away from EM and back home” in fear of slowing and deleveraging EM economies and policy shifts. But the relevant issue is not whether portfolio flows are moving out of EM. They are. The main question, says Mr Oakley, is the capacity of EM countries to deal with them. In China, Taiwan, South Korea, Singapore and India, the strength of other factors, including net international investment positions, current account balances and GDP growth, give the lie to the idea that these countries are in the grip of persistent, long-lasting weakness. “The reason a lot of EM economies are slowing down is many of them are commodity exporters,” says Mr Oakley. “You can’t lump them all together. Brazil, Mexico and Indonesia are suffering, but the health of economies like China, Korea and Taiwan are fantastic compared to other EM countries.” In Mr Oakley’s view, “we are very near to the bottom of EM currencies”. Mr McNamara is more cautious. There will be a turn in some currencies, particularly among commodity importers such as India, Poland and Mexico, he says. “But the big problem is that word again — growth,” he adds. Many EM countries cannot get the engine going. “We had a brief surge in credit after the financial crisis when most of EM cut rates at the same time as the developed market. But with the credit leg kicked away, the export leg isn’t kicking in with sufficient strength to really drive EM,” Mr McNamara says. The adjustment in EM currencies has been substantial enough that it is hard to see their currencies falling much further, he adds. “But without the engine of growth, we are not going to see a strong EM rally.”