PepsiCo: A Push Into Emerging Markets

While the $820 billion global soft drink industry saw continued steady growth in 2013, with sales increasing by around 5% compared to the previous year, the competitive pressure continues to intensify. The continuous weakening demand for carbonated soft drinks in the developed markets is a big concern for PepsiCo. About a month ago the activist investor Nelson Peltz suggested spinning-off the beverages business and acquiring Mondelez International. 

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Emerging Market Debt Trading Volume Up

Trading volumes of emerging market debt edged just slightly higher in 2013 versus the prior year, reflecting investor concerns over changing monetary policies and global economic growth prospects, a new survey showed on Thursday. The volume of emerging market debt rose to $5.571 trillion last year, an increase of just 0.22 percent versus the $5.559 trillion that changed hands in 2012, according to EMTA, the trade association for the emerging markets debt trading industry. Trading volumes did rise 4 percent in the fourth quarter of last year to $1.320 trillion compared to $1.269 trillion in the same period of 2012.

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China and Emerging Markets: The Quiet Rebound

The first quarter of 2014 is almost in the books, and so far things have been a lot tougher in the markets than the previous two years. For example, year to date through March 25, the S&P 500 is up about 1.8%. Last year, the index was up nearly 6% through the first three months. In 2012, we already were up about 11%.  Yes, it’s been harder to make money this year, and that’s particularly true if you’ve been allocated to China and/or emerging markets. The charts here of the iShares China Large-Cap ETF (FXI) and the iShares MSCI Emerging Markets (EEM) show the respective tumble that took place in January, which was followed by a lot of volatility through mid-March.

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Has the Emerging Market Buying Moment Arrived?

Emerging market assets haven't seen much love in the wake of investor infatuation with developed markets, but they may come back into fashion.  "Emerging market assets have switched from 'priced for perfection' to value or even deep value," Societe Generale said in a note, advising investors start to add exposure, particularly in emerging Asia.  It's a major shift for SocGen, which declared "the EM party is over" back in March of 2011. The bank has raised the weight of emerging market equities and bonds in its multi-asset portfolio to 5 percent each from zero.

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For Emerging Markets, Fed Taper Fears 'Just A Fad'

The world loves a fad. Markets are no different.  Remember when Greece was going to lead to the break up of the Eurozone? That narrative “was a fad,” said Jan Dehn, Head of Research for Ashmore Investment Management in the London.  Here are some more. The idea that Japan could escape its structural problems simply through monetary and fiscal stimulus was a fad. China’s hard landing was a fad, and still is. Which brings us to the entirety of emerging markets.

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-Igor Purlantov

Emerging Stocks Gain Led by China on Stimulus Bets

Emerging-market stocks rose for a second day as Hong Kong-listed Chinese shares rallied the most in four months on speculation the government will take steps to counter slowing economic growth. Russia’s ruble strengthened.  The Hang Seng China Enterprises Index (HSCEI) jumped 2.8 percent. Yanzhou Coal Mining Co. surged 6.6 percent in Hong Kong after profit exceeded estimates. Russia’s Micex Index trimmed a gain of as much as 2 percent. The ruble climbed for a second day against the central bank’s target basket of dollars and euros as concern waned that western nations would step up sanctions, while world leaders gathered in The Hague to discuss the conflict in Ukraine. India’s S&P BSE Sensex jumped to a record.

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-Curated by Igor Purlantov

Currency Risks Could Grow in Emerging Markets

Corporations could be entering a new phase of currency volatility. Emerging-market currencies in countries such as Argentina, India and China could have a bigger impact on earnings in the coming years.  “In the very long term there’s a good reason to invest in emerging markets, however in the next few years I think we’ll see a lot of volatility,” said Bilal Hafeez, Deutsche Bank AG’s global head of foreign exchange strategy.

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Fates of ‘Fragile Five’ Diverge

The “fragile five” are going their separate ways.  Seven months after Morgan Stanley coined the term to describe five formerly fast-growing emerging markets seen at risk of an investor flight, their fates are diverging.  The comparison was apt for a while. Brazil, India, Indonesia, South Africa and Turkey all faced high inflation, weakening growth, and growing current-account deficits (essentially the combination a country’s trade balance and investment flows).
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Emerging Markets: Is It 1997 All Over Again?

It looks like déjà vu all over again for emerging markets (EM). The past months has renewed concerns about EM given the political upheaval in countries including Thailand, Turkey and the Ukraine; currency devaluation in Argentina; and rising concerns over sub-par GDP growth in China compounded by its impending debt crisis. Emerging market performance across asset classes have been among the worst-performing in 2013, along with increased volatility. 

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Russia, Emerging Markets Rebound Post Crimea

Russian stocks saw their best day in just over two weeks on Monday, driving other emerging markets higher as the fallout from a controversial referendum on Crimea so far has not triggered as severe sanctions by Western powers as expected. Investors remain braced for more volatility, though, with Russia stocks in particular viewed cautiously by many strategists in an emerging-market picture that is fogged by China growth concerns as well.

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The Case For Buying Emerging Markets

The emerging market slowdown has been one of the big stories in the last year or so. Stock markets from Brazil to Turkey to China all posted significant losses for calendar 2013 despite a 30% gain for U.S. equities. But what’s the story right now? Are emerging market stocks a good opportunity after the recent pain, particularly for investors who are a bit worried about the American stock market may not pack as much punch? It could be.

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Why Emerging Markets Have Been So Turbulent

Ukraine had $65.9 billion in debt in 2012, which represents 37.4% of the country’s estimated gross domestic product. Generally, investors use government debt as a percent of GDP to measure the country’s ability to make future payments on its debt, thereby affecting the country’s borrowing costs and government bond yields. With a huge amount of payments coming due—about $13 billion this year and $16 billion before the end of 2015—Ukraine may require a bailout. However, there’s no clarity as to who will rescue Ukraine from a catastrophic default.

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Russian, Turkish Currencies Buck Emerging Market Trend

Emerging market shares and currencies were broadly firmer on Thursday, shrugging off weak Chinese economic data and focusing on a stronger yuan and more stability on commodity markets.  The Russian and Turkish currencies were flat, however, remaining under pressure as the former looked set to be hit by Western sanctions and the latter was weighed on by escalating domestic tensions before March 30 local elections.

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Will China Lead Emerging Markets?

I've been bringing a lot of attention as of late to China, which up until the world was "Putinized" as a Twitter follower of mine calls it, looked to be due for a meltup. Commodities prior to the Ukraine/Russia confrontation had been showing signs of strengthening, and emerging markets overall looked to finally be stabilizing.Our ATAC models used for managing our mutual fund and separate accounts had exposure to emerging markets more broadly, but rotated back toward the U.S. as relative momentum, once again, failed to stick just before Crimea news was hitting the airwaves.

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Antianxiety Pill for Emerging Markets

With the recent slowdown in a number of emerging markets economies, many are proclaiming an end to the recent era in which they were the chief engine of global economic growth. While there's no denying that emerging markets expansion is not as robust as it has been in recent years—whether a shorter-term function of cyclicality or a longer-term slowdown in economic development—we believe the long view of these markets will prove to be a positive one, particularly in health care.

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One Emerging Market To Buy

Investors can’t bail fast enough on emerging markets at the moment. And rightly so, given the potential for further problems as I highlighted in last week’s post, Emerging Market Banking Crises Are Next. But the indiscriminate sell-off of emerging markets also opens up some potential opportunities. Asia Confidential thinks South Korea stands out as one such opportunity. 

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India Leads Emerging Stocks Higher

Indian shares rallied to record highs on Friday on hopes of a market-friendly outcome to upcoming elections, leading broader emerging equities to six-week highs ahead of key U.S. jobs data.  Investors are awaiting the U.S. payrolls numbers that could provide clues about the pace at which the U.S. Federal Reserve reduces monthly bond-buying. But there was some relaxation in recent market tensions over Ukraine, where many had feared the outbreak of fully-fledged war with Russia.

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Are Emerging Markets Really Suffering From Outflows?

Headlines in the recent months claiming that investors have been rushing for the exits in emerging markets are a great exaggeration, according to an expert.   "There's a view that investors are all bearish and getting out of emerging markets. That's primarily based on the fund-tracking firm (EPFR) data," Alberto Ades, co-head global economics and head of GEMs fixed income strategy at Bank of America Merrill Lynch said at a press briefing on Wednesday.  "It's a very small sample that's very biased to retail investors. If you find other data sources to expand that, what you find is no outflows," he said.

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Emerging, But No Longer A Mother Lode

When it comes to investing in emerging markets, few companies have been as gung-ho as Diageo, the British maker of the Guinness, Johnnie Walker and Smirnoff brands. But now that troubles are cropping up in many such countries around the world, Diageo has turned from cheerleader to excuse-monger.Government crackdowns on high-end drinking in China. Inflation and currency worries in Argentina and Venezuela. Political turmoil in Thailand; saturated beer markets in Nigeria; a religious backlash in Turkey. These and other adversities were cited by company officials this year when Diageo announced disappointing profits.

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Emerging Market Stocks Rebound As Micex Rallies

Emerging-market stocks rebounded and Russia’s Micex Index rallied the most since May 2010 as the prospects for all-out war in Ukraine receded. The ruble climbed from a record low.  The MSCI Emerging Markets Index rose 0.3 percent to 953.80 at 10:49 a.m. in London, following yesterday’s 1.6 percent slump. The Micex Index jumped 4.8 percent after plunging 11 percent, the most since November 2008. The ruble strengthened 0.6 percent against the central bank’s basket of dollars and euros after closing at an all-time low 42.6570. Turkey’s lira and the Polish zloty both gained at least 0.7 percent.

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Emerging Markets Look Appetizing

Remember emerging markets?  Four short years ago, the stock markets of the developing world—like China and Brazil, India and Indonesia, Thailand and Turkey—were the place to be. In 2009 and 2010, as these economies grew much faster than the U.S., emerging-market stocks shot up by an average of 46% annually—more than double the returns on U.S. stocks. Investors stampeded in, adding $119 billion to emerging-market mutual funds and exchange-traded funds between 2010 and 2012.  But growth is slowing in China and Latin America; turbulence is swirling

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