Global Emerging Markets Update

Below is a selection of our key emerging views, as taken from the latest edition of our weekly Emerging Markets Monitor publication.

  • We expect currencies in Emerging Asia to outperform the US dollar on the whole. The Chinese yuan and New Zealand dollar are clear outliers, as reflected in our bearish Asset Class Strategy views on these units.
  • Within Emerging Europe, we are particularly bearish towards the Hungarian forint, given the weak macro fundamentals and damage to the central bank's credibility. Moreover, given that we are relatively bullish towards the Romanian leu, we believe that there is interesting opportunity in the RON/HUF cross-rate.
  • We expect the recent strength of the Brazilian real to give way to depreciation as a result of US treasury yields heading higher.

Latin America – Venezuela: Bond Rally Unlikely To Last
Although optimism regarding a more market-friendly exchange rate system has seen yields on Venezuelan debt fall substantially, we believe that the rally has likely run out of steam.

Europe – Russia: Limited Macro Impact From Sanctions
The recent wave of sanctions against Russia confirms our view that absent a military invasion of mainland Ukraine, the West's response will be relatively limited in scope.

MENA – Egyptian Pound: Depreciatory Pressures To Build
We expect stability in the Egyptian pound over the coming three-to-six month period, but warn that longer-term risks for further depreciation remain.

Africa – Regional Equity Strategy
We anticipate rises in Nigerian and Zimbabwean equities: both countries have seen valuations fall and could be in line for a move higher.

Our full range of macro and financial market views is available to subscribers at Business Monitor Online.

Last Week's Trivia Question

Last week’s trivia question had the theme of anniversaries and is as follows: What major European political event, which would have a substantial impact on Africa, took place 40 years ago today? [April 25] And what powerful organisation, which is also one of the largest employers in the world, and headed by a man aged approximately 30 years, marks its 82nd anniversary today? [April 25] The answer to the first part is Portugal's 'Carnation Revolution', which overthrew the authoritarian regime and paved the way for democratisation and the independence of Portuguese colonies in Africa. The answer to the second part is the (North) Korean People's Army (KPA), which has 1.1 million personnel.