Strong Local Currency Performance As Rates Remain Steady Returns in the emerging markets debt space have so far in 2016 ranked commensurately with risk. More specifically, local debt has been…
As the chart above shows, flows into emerging markets funds remained positive but diminished considerably from July and August.
Strong investor interest in emerging market debt (EMLC) (HYEM) has continued despite adverse political and economic issues in some countries.
Negative bond yields in Japan and the Eurozone, coupled with very low federal funds rates in the United States, are part of why emerging market bonds and currencies have performed so well in 2016.
Emerging market (or EM) debt (EMLC)(HYEM) has, over the last several years, struggled as an asset class.
Republican presidential candidate Donald Trump stated that he intends to weaken trade links between China and the US, and that he would be likely to introduce trade policies against China.
Mexico stands to be greatly impacted by a Donald Trump victory in the 2016 US presidential election. Renegotiating NAFTA would impact a variety of industries in Mexico, especially the auto industry.
The MSCI Emerging Markets Index has delivered positive Election Day returns only twice out of the seven presidential elections that have been held since the index was created. The 1996 and 2004 elections—in which incumbent presidents were re-elected—saw 1.4% and 6.1% returns.
Equity markets in BRIC countries mostly rose. Only Russia (RSX) posting a small decline in October.
Could change drive growth in China? China (FXI) (MCHI) is another economy drawing much investor interest. With a stock market crash, currency devaluation, and talks of a leadership shuffle, the economy…
The oil price plunge The oil price plunge, which started in mid-2014, has been causing much havoc across financial markets. Around the world (ACWI) (VTI), the price of crude oil (USO)…
US GDP recorded the biggest gain in 3Q16 since 2014—it rose 2.9% in 3Q16. It’s better than the market’s expectation of 2.5% growth.
Saudi Arabia has also been involved in the sale of US Treasuries. The country is the 15th-largest holder of US Treasury bonds in the world.
Oil is critical to Saudi Arabia. The country is the largest exporter of petroleum, with 18% of the world’s proven petroleum reserves.
The plunge in oil’s price since mid-2014 has had a direct and negative bearing on Saudi Arabia’s public finances.
On October 20, the government of Saudi Arabia raised about $17.5 billion in an international bond issuance, marking the emerging market’s first foray into the international bond market.
The IMF expects the economy of Brazil to fall 3.3% in 2016, following its 3.8% decline in 2015.
In its October World Economic Outlook, the IMF projected that India’s economic growth would reach 7.6% in both 2016 and 2017.
The IMF noted that emerging markets and developing economies need to avoid being financially vulnerable and to ensure that growth won’t reverse course.
Russia’s suspension of nuclear energy–related pacts with the US (IWD) is a definite step back from the two economies cooperating in nuclear disarmament.