- The dismal performance of emerging market equities during the past three years (a total of -20%) suggests that a rebound may lie around the corner.
- Yet, country-specific factors aside, three key global factors argue otherwise: 1) insufficiently attractive EM valuations, 2) the structural deterioration in EM balance sheets and the resulting vulnerability to 3) tightening global monetary conditions.
- The latter in particular far surpasses the small 25bps hike the Fed delivered in December 2015. The end of QE3 is estimated to be equivalent to a 300bps tightening, while the sharp decline in foreign holdings of US Treasury securities further adds to a vicious cycle of tightening monetary conditions.
- In the short term, rising commodity prices provide non-trivial support to EM assets, but the persistent structural economic weakness and the risk of a shock to market expectations of Fed hikes implies that investors should fade rallies, rather than buy into them.
- This says it (almost) all: 2 months ago
- Gegen die Hoferisierung Österreichs: Der Aufstieg Norbert Hofers ist der vorläufige Höhepunkt einer langen Reihe... macroathart.com/other/ 3 months ago
- The dismal performance of emerging market equities during the past three years (a total of -20%) suggests that a... fb.me/5gxtzuyFB 4 months ago
- The Four Questions for Financial Markets: fb.me/2HzjM54Xv 4 months ago