Russia’s 10-year bond yield has climbed for the 10th consecutive day to a new five-year high of 12.4 per cent as investors continue to exit the country’s financial markets, fast FT reports.
The rouble regained its footing somewhat last week, but only thanks to central bank intervention. It is today once again the world’s worst performing major currency, falling 1.4 per cent to 53.62 per US dollar (see chart below). Read more
Teeth have long been gnashed over the dismal demographic trends of the developed world, with the babyboomer generation soon set to retire and fewer workers around to pay for their healthcare and pension costs. But the developing world also faces a demographic challenge, fast FT reports.
The young and rising labour forces of emerging markets have been a crucial factor behind their rise over the past decade, but in a report, Moody’s points out that the positive effect this has had on growth is fading. Read more
Investor nerves are once again fraying over Venezuela’s $4.5bn worth of bond repayments due this month, sending the cost of insuring against a government default to its highest in over seven months and within a whisker of a six-year high, fast FT reports.
Caracas has a $1.5bn government bond due for repayment on Oct 8, and state-owned oil company PDVSA has a $3bn debt repayment on Oct 28. For most oil-rich countries that shouldn’t pose much of a problem, but Venezuela’s economy is a mess after years of poor management. Read more
Emerging markets are heading for their longest uninterrupted slide in almost two years, as Chinese growth concerns add to fears over the impact of the US dollar’s resurgence and the possibility of US interest rate hikes on the horizon, fast FT reports.
The FTSE Emerging Index of developing stock markets has fallen another 0.7 per cent today, its eighth consecutive day of declines and the longest losing streak since November 2012. Not even in the depths of the global financial crisis did the gauge fall for eight straight days.
Barring a late turnaround, emerging markets look set for their worst week in 10 months, as nervousness over the dollar’s resurgence and US interest rates overpowered last week’s policy easing from the European Central Bank, fast FT reports.
The FTSE Emerging Index has lost another 0.3 per cent today, its seventh straight day of declines, taking this week’s tumble to 2.8 per cent – the longest run of declines and the biggest weekly drop since November 2013 (see chart).
However, the Frontier 50 Index, made up of recondite bourses in countries like Argentina, Bahrain, Vietnam, Oman and Ghana, rose for a sixth day running on Friday, taking the gauge’s gain this week to 1.6 per cent and the highest level since 2008. Read more
Richard Thomas, a dreadlocked Jamaican sound engineer and musician, is still livid over the last time he was arrested and briefly jailed for smoking marijuana. While his country is plagued by one of the world’s worst homicide rates, the “jailhouses are filled with people that have just smoked a spliff,” he fumes.
Thomas, who performs under the name of Jah Pinks, said he now prefers to drink marijuana tea; it’s better for his lungs and can be done discretely without the police hassling him over something many Jamaicans see as an integral part of their culture.
Paradoxically, while marijuana use is prevalent across the Caribbean the drug remains illegal in every single country – something that has often puzzled and frustrated both locals and visitors. That, however, may be about to change. Read more
Haiti and the Dominican Republic share a long and tumultuous history. The two countries are joined by geography but separated by language and scarred by reciprocal massacres. Yet after a brief thaw in the wake of Haiti’s devastating 2010 earthquake, relations between the two halves of the Hispaniola island are once again unravelling.
The latest contretemps was triggered by a far-reaching, controversial judgement by the Dominican Constitutional Court in September. The Dominican Republic has long held that anyone born in the country is automatically a national, but the judges ruled that those born while “in transit” do not qualify – including the children of Haitian migrants that have historically done most of the country’s menial labour. Read more
The snaking, sun-scorched streets of Kingston, Jamaica’s capital, are dotted with thousands of signs advocating road safety. “Want to spend time with your family? DON’T SPEED, SPEED KILLS,” shouts one. “You may be dead wrong if you overtake carelessly,” warns another. Nary a stretch of asphalt is without some kind of cautionary signage. Read more
The legal battle between Argentina and its hedge fund creditors is approaching a finale. Few expect it to end in anything other than a crushing defeat for Buenos Aires.
Anticipating its rout, Argentina earlier this week asked for an unlikely Supreme Court hearing. While this may delay a reckoning, the New York courts will probably leave Buenos Aires facing a stark but unpalatable choice: pay hedge funds led by Elliott Management – or default on its international debts again. Given that Argentina excoriates its opponents as “vultures”, it is expected to choose the latter option. Read more
Sovereign debt restructuring is like baking a cake, some experts quip. With the appropriate ingredients – creditor pain stirred in, a sprinkle of fiscal adjustments – the process can be relatively smooth and the outcome fairly equitable.
So far, it seems Belize is not following the right recipe. Read more
While most Americans were queuing to cast their votes in the US presidential election, lawyers working for Elliott Associates were filing a request for a New York court judge to expedite its ruling against Argentina, the hedge fund’s nemesis.
Investors who still hold Argentina’s defaulted debt include thousands of Italian retail investors, but Elliott and Aurelius Capital – another hedge fund set up by a former Elliott executive – have been the most aggressive in chasing Buenos Aires through the courts. Read more
Sub-Saharan Africa’s local bond markets are for the most part small and rudimentary and lack transparency. In some cases even yields are difficult to find. But many have made significant progress in recent years, potentially offering succour to companies starved of institutional funding.
These markets – where the debt securities are priced in Nigerian naira, Kenyan shillings, Zambian kwacha or Botswana pula, as opposed to US dollars – are mostly dominated by government bonds. For companies the cost is often high and the process arduous. But several markets now boast an array of corporate bonds – and more are on the way. Read more
Spain may not be Uganda, as its premier Mariano Rajoy undiplomatically exclaimed in a text to his finance minister earlier this year. According to bond investors, it is Zambia.
The Republic of Zambia this week sold its maiden 10-year dollar-denominated bond, raising $750m from international investors. Funds swamped the deal with orders of about $12bn, allowing the country to price the bond at a yield of just 5.625 per cent. Spain’s 10-year bond yield is currently 5.78 per cent. Read more
If only the economic performance of the Caribbean matched the sporting prowess of its athletes.
The Caribbean may be sunnier than Europe, but it shares many of the Old Continent’s problems – namely anaemic economic growth, uncompetitive economies and burgeoning debt burdens. Read more
There are many investors whose success and longevity has translated into financial fame. But few have been the subject of a Japanese Manga-style illustrated book detailing their exploits. Yet Mark Mobius’ striking bald pate and status as a pioneer of investments in strife-torn, underdeveloped countries made him a fitting, if unusual, subject of a 2007 comic by Kaoru Kurotani – Manga Mark Mobius, an Illustrated Biography of the Father of Emerging Markets Funds.
The “emerging markets” moniker was first invented by Antoine van Agtmael of the International Finance Corporation in 1981 to rebrand nations previously known as “less-developed countries”. But it was Mobius who was approached by Sir John Templeton to launch what is considered the first dedicated emerging market equity fund in 1987. Read more
UBS’ capture of Italian dealmaker Andrea Orcel from Bank of America Merrill Lynch has paid another dividend in the form of a lead role on VTB’s $1bn perpetual bond sale, the first VTB deal the Swiss bank has worked on in over a decade.
VTB, Russia’s second largest lender, on Friday sold a $1bn perpetual Eurobond yielding 9.5 per cent to boost its core capital. It is relatively unusual for financial institutions to issue perpetual bonds, which are never paid back, and it is the first such instrument to be sold by a Russian bank. Read more
After a discreet but damaging spat over licensing that saw Saudi Arabia fall out of MSCI’s indices in 2009, the Middle East’s largest economy and the world’s most influential emerging markets index provider appear to have kissed and made up.
MSCI said on Monday that it will reintroduce its Saudi Arabia Domestic Indices and related regional indices – such as the MSCI Arabian Markets – in June, a move that some hope could signal another move by Saudi Arabia to ease foreign investor access to its bourse, the largest and most liquid in the Arab world. Read more
Emerging market equity investors may not always like the smell of state control, fearing that the interests of minority shareholders may be hijacked by activist governments, but as Morgan Stanley showed in a recent research note, state-owned companies have overall outperformed their private counterparts in recent years.
Indeed, they have done much better. The 122 members of the MSCI Emerging Markets index that have state ownerships of 30 per cent or more have beaten the index by a cumulative 260 per cent since January 2001, and by 33 per cent since late October. Read more
What country enjoys a bountiful tourism industry and pleasant weather, but has seen a government overspending and ill fortune send its indebtedness soaring, forcing a sorely needed sovereign restructuring?
The answer, of course, is Saint Kitts and Nevis, the lush West Indies island federation.
The similarities don’t end there. Like Greece, St Kitts has been locked in an inflexible monetary bloc – the East Caribbean Currency Union – limiting its options in the face a debt-to-gross domestic product of almost 200 per cent when it first embarked on a restructuring last summer. Read more
While interest in frontier market debt may be waxing, international investment in frontier equity markets has waned considerably of late.
After robust inflows over most of 2010, funds dedicated to frontier markets and tracked by EPFR Global, a data provider, have suffered a five month streak of net outflows. Investors have now withdrawn money for nine of the past 12 months, cutting the total assets under management to $7.5bn. Read more