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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (870)	6/11/2018 1:54:09 AM
From: elmatador	Read Replies (1) \| Respond to of 13795

Correct what I think it is at play is the following: A CFO of a company in Brazil, will use borrowing in USD as competitive strategy, His competitor, that is borrowing in local currency will be at disadvantage and follow suit. Besides they decide to play the market with the company's money. Everything goes until the US vaccum cleaner is switched on. It happens time and again. And they always repeat the same mistake. The allure is too big to resist.

To: Elroy Jetson who wrote (870)	6/11/2018 8:23:07 AM
From: elmatador	Respond to of 13795

Almost half of the increase in external debt of emerging market economies corporates excluding China and Hong Kong reflects intercompany debt (notably Brazil, Russia, South Africa and Argentina; red bars in Figure 4). in the article link below Corporate debt in emerging market economies (EMEs) atradius.nl Summary Corporate debt in emerging market economies (EMEs) has significantly risen, outpacing earnings growth. This is raising concerns about corporate creditworthiness given an increasingly challenging economic environment. EMEs shock absorption capacity is stronger than previous periods of global market turbulence, but some sectors remain vulnerable. Corporates that are highly leveraged, have borrowed externally in USD or have relatively low buffers are most vulnerable. These corporates are concentrated in Brazil, India, Indonesia, Russia, South Africa and Turkey. Corporates operating in the energy, mining, construction (materials) and transport sectors are also exposed. Companies in the real estate sector should be watched as well, as they generally do not hedge their foreign currency exposure. The way I understand this is: Global economy foreign subsidiaries took advantage of the near zero interest rates to borrow from their foreign mother companies