Emerging Markets Turmoil: Quit Overreacting

For years, the market mantra was that emerging markets represented future growth.Lately, however, investors have pulled record levels of capital out of economies from Brazil to India. This is an overreaction; too many investors and analysts are focusing on short-term fluctuations rather than keeping their eye on emerging markets' longer-term prospects.  Though the sell-off has eased, emerging market funds experienced massive outflows soaring to more than $33 billion in the 15 weeks before February, according to Morgan Stanley.

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Phone Makers Look to Emerging Markets for Growth

Here's the rub for companies: A good part of the key markets they serve already own smartphones and use them to connect various Internet services. How do you grow from there?  Services from Facebook to Firefox are looking to emerging markets for the next few billion people. They are not only targeting the obvious high-population countries such as India and China, but also see potential in Latin America, Africa and just about everywhere beyond the U.S., Canada, western Europe and a few Asian nations.  One message has been clear this week at the Mobile World Congress wireless show
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Ukraine Won’t Derail Emerging Market Gains

A president on the lam and an angry Russian bear looking to assert his authority on a wayward former territory. Although the situation gets murkier in Ukraine, the prospects of contagion coming from the former Soviet state seem minimal, judging by global market reaction. The question for investors is why the Ukraine situation differs from Greece’s insolvency, or on a smaller scale, Cyprus’s banking failure, when European markets roiled from the daily drip of bad news coming from these two small countries.

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Nokia Targets Emerging Markets With Android Phones

Nokia is targeting emerging markets with three low-cost smartphones that use Google's Android operating system rather than the Windows Phone software from Microsoft, which is about to take over Nokia's handset business.  Nokia will ditch many of the Google services that come with Android and use instead the Microsoft services such as Bing search, Skype communications and OneDrive file storage. Its home screen sports larger, resizable tiles resembling those on Windows phone.  "More and more people are buying smartphones for less that 100 euros," Stephen Elop, Nokia executive vice president, said Monday as he presented the new phones at the Mobile World Congress in Barcelona, Spain. "That sub-100 range is a massive opportunity for us. According to analysts, it will grow four times as fast as rest of smartphone market."

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Playing Emerging Markets Through Western Blue Chips

Investors today face a quandary with emerging markets. Sentiment towards them is bearish, and has been for some years now, with far greater faith in developed economies than developing. But at the same time, there is no denying that emerging markets, with their high populations and strong demographics, will be the engines of global growth in years ahead.  While investors grapple with the question of when it will make sense to re-allocate assets to emerging market shares in expectation of a rebound, there is another way of gaining exposure to developing world growth rates without having to deal with local, falling stock markets. 

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Emerging Markets Must Do Homework

Emerging markets should get their own houses in order before demanding solidarity from other nations, German Finance Minister Wolfgang Schaeuble said.  The troubles in emerging markets would be the main topic discussed by finance ministers and central bank chiefs at the G20 summit in Sydney this weekend, Schaeuble told CNBC in an interview broadcast on Friday.  Stock, bond and currency markets in developing countries have convulsed in recent months, hit by concerns over weaker economic growth and the winding down of stimulus in the United States.

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Emerging Market Storm Boon for Euro Zone

A reversal in fortunes between southern Europe and once-booming developing economies has triggered a substantial allocation shift by global funds out of emerging assets and into the euro markets they fled two years ago.  Escalating violence in Ukraine and the suspension of Nigeria's central bank governor hit emerging market assets on Thursday, even as Spain, once seen as the focus of the euro zone debt crisis, saw its long-term borrowing costs tumble to their lowest since 2008.

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Forget Emerging Markets, Frontier Markets Still Rising

Capital is heading home. Trade deficits are soaring. Reform has stalled. And the easy years of catch-up growth have come to an end.  There are no shortage of reasons why the markets have turned bearish on the emerging markets, and there are plenty of explanations for why they have been so badly hit at the start of 2014.  There is one thing that does not quite add up, however. While the emerging markets have been tumbling, the frontier markets have been doing as well as they ever did. They easily out-performed most other assets last year, and have carried on rising even as a wider crisis has rippled through the developing world. 

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Emerging Market Currency Devaluation

The interesting news these days is all about currency devaluation in the emerging markets. Due to the tapering of the Federal Reserve, we now have an unintended consequence. All of the cheap money supplied by the Federal Reserve that went to the emerging markets is now coming home. Some of the emerging market countries are already feeling this pressure of currency outflows. As a result, they are raising interest rates at a very fast pace which collapses their economies.

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Bundesbank Unfazed by Emerging Markets,

The turbulence experienced in emerging markets early this year is insufficient to derail a recovery in the global economy, which could strengthen during 2014, Germany's Bundesbank said on Monday.  Currencies in Turkey, South Africa, Hungary and Russia suffered major sell-offs over the past month before recovering slightly after central banks fought back via interest rate hikes or exchange rate interventions.

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Politics Could Whip Up New Emerging Markets Storm

A stabilization in emerging markets after January's rout may turn out be the calm before the storm if political flare-ups and Fed policies provide the spark for the next round of selling.   Currencies in Turkey, South Africa, Hungary and Russia, which suffered violent sell-offs over the past month, have recovered slightly, partly because central banks have fought back via interest rates hikes or exchange rate interventions.

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Where to Find the Best Opportunities in Emerging Markets

 

There are a significant number of concerns regarding the emerging markets at this time. Investors are asking if emerging market stocks are a good buy right now; are the troubles over or are there still more to come?  As it stands, it seems further troubles are brewing in the emerging markets, as the Federal Reserve tapers its quantitative easing program. We have seen currencies in countries like Turkey, South Africa, Russia, and Argentina decline significantly.

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Emerging Markets in Asia in a Delicate Limbo

The docks at big Indonesian ports like this one are quieter these days, as China’s demand for raw materials has begun to cool.  But drive an hour inland and the agricultural giant Cargill is racing to finish a cocoa bean processing plant, while a large instant-noodle factory is running full tilt to meet the demand for convenience food from Indonesia’s large and growing middle class. “We’re having quite a tough time keeping up,” said Tjun Sulestio, a general manager of the noodle factory, run by PT. Suprama.

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Have Emerging Markets Been Oversold?

Emerging market stocks have taken a pasting in recent weeks.  As concerns about the U.S. Federal Reserve trimming its monthly stimulus measures and an economic slowdown in China mount, riskier assets have floundered. MSCI’s emerging-market shares index, priced in dollars, has dropped 6.7% since the start of the year. Investors, seeking to curb losses, have been fleeing in droves.  Yet the panic may be overdone, some money managers say.

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Emerging Markets: Are We There Yet?

Emerging-market currencies are on the mend after a pretty brutal selloff in the past few weeks.  But it has been painful, and still is. Only six weeks into the year, and investors have already pulled out an eye-catching $18.59 billion from emerging market equity funds, according to Barclays, citing data from fund-tracker EPFR Global. “This brings the year-to-date outflows from equity funds to more than the whole of 2013,” the bank notes, pointing to net outflows of $15.26 billion last year.

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How Fragile Are Emerging Markets?

Emerging-market equities and exchange rates are again under severe downward pressure, but are the underlying economies really as fragile as global traders seem to fear? The short answer, for a few, is probably "yes," but for most, "not just yet."  For most countries, what we are seeing is a recalibration as investors incorporate the risk that China's GDP might rise more slowly, the U.S. Federal Reserve might start tightening monetary conditions more quickly, and policy backsliding in many countries might undermine potential growth. 

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Amid Emerging Markets Gulf Stocks Provide Shelter

For years, the United Arab Emirates and Qatar along with some of their Gulf neighbors have coveted an emerging market tag – a moniker that would in a lot of ways symbolize their arrival on the global stage as potential economic powerhouses.  And last year they were bestowed that recognition when index compiler MSCI promoted the U.A.E. and Qatar to emerging status from frontier.  The party was on as investors pushed the stock markets there higher – in anticipation of more gains on the back of the hundreds of millions of dollars in investments that will likely accompany the upgrade when it becomes effective in May. After all, billions of dollars are benchmarked to emerging markets globally.

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Investors Cling to Frontier Markets

As emerging markets tumbled this year, the riskiest country groupings on the fringes have been a haven. Small markets, local stories and in some cases pegged currencies backed by strong central bank reserves have shielded frontier markets from the worst of the emerging market rout.  Lebanon, Tunisia, Bulgaria, Lithuania, Qatar and Kuwait are among the world's lesser developed markets and are outperforming more mainstream emerging markets in the most recent storm.

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Three Truths About Emerging Market Investing

Investors continue to abandon emerging markets . As I write in my new weekly commentary , last week marked the 14th week of outflow from emerging market equity funds and the largest weekly outflow seen since August 2010.  Last week's selloff came as number of emerging market countries - including Turkey - raised their benchmark interest rates in an effort to stem the pressure on their currencies , and as political turmoil in the Ukraine and Thailand continued. 

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Looking for Emerging Markets Bargains

Mark Mobius is bargain-hunting for emerging-markets stocks. But the selloff may need to deepen before this veteran value investor gets really interested.  “We view such selloffs as opportunities to pick up bargains if, in fact, the prices move low enough,” said the globe-trotting, 77-year-old executive chairman of Franklin Templeton’s Templeton Emerging Markets Group, via email.

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