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Emerging Markets: What has Changed



marctomarket.com / by Marc Chandler / Jan 21, 2016

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(from my colleague Dr. Win Thin)
  • Prime Minister Phuc said Vietnam will ease the limits on foreign ownership of banks this year.
  • Russia’s government is working on measures to limit ruble volatility, including possible FX purchases.
  • Turkey’s central bank start auctioning FX swaps to help support the lira.
  • Brazil’s central bank resumed rolling over FX swaps.
  • Brazilian Supreme Court Judge Zavascki was tragically killed in a plane accident.
  • Chile’s central bank started the easing cycle.
  • Mexico significantly lowered its FDI forecast for 2017.

In the EM equity space as measured by MSCI, Turkey (+2.1%), Qatar (+2.1%), and Brazil (+2.0%) have outperformed this week, while Russia (-1.8%), Thailand (-1.5%), and South Africa (-1.0%) have underperformed. To put this in better context, MSCI EM fell -0.4% this week while MSCI DM fell -0.2%.

In the EM local currency bond space, Turkey (10-year yield -10 bp), Brazil (-10 bp), and Malaysia (-4 bp) have outperformed this week, while Poland (10-year yield +11 bp), Colombia (+8 bp), and Czech Republic (+7 bp) have underperformed. To put this in better context, the 10-year UST yield rose 9 bp this week to 2.49%. 

In the EM FX space, PEN (+1.6% vs. USD), BRL (+0.9% vs. USD), and COP (+0.5% vs. USD) have outperformed this week, while TRY (-2.5% vs. USD), MXN (-1.5% vs. USD), and PHP (-0.6% vs. USD) have underperformed. 

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