Entries filed under 'Emerging Markets'

    Emerging Markets Are Looking Attractive Again

    April 13, 2016 9:46 AM by Leah G. Traub, Ph.D.

    Emerging market asset classes rallied sharply in the first quarter.

    After a challenging 2015, emerging market (EM) asset classes—including foreign exchange, local- and hard- currency sovereign and corporate bonds, and equities—received a substantial boost in February and March 2016 due to a number of supportive factors.

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    Emerging Markets: Reading the Tea Leaves on China's Currency Moves

    August 14, 2015 1:18 PM by Leah G. Traub, Ph.D.

    China first devalues—then supports—its currency.  What exactly is going on?

    After two days of depreciating its currency, the yuan (or “renminbi”), and effectively sending global currency markets into turmoil, China’s policymakers apparently decided late Wednesday (August 12, Shanghai trading time) that the currency had fallen far enough, at least for now.  

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    El Nino: The Agricultural Sector Prepares for Impact

    July 30, 2015 2:50 PM by Lord Abbett Editorial Staff

    After a five-year absence, the El Niño weather phenomenon is back, and it may have far-reaching effects on the world’s agriculture markets.

    For some investors, events in Greece and China may take a backseat to another, more natural phenomenon: the warming of the ocean waters in the central and eastern tropical Pacific Ocean, an event better known as El Niño. As unpredictable as the weather can be, when an El Niño occurs, the location of some of that year’s biggest weather anomalies can be predicted with a higher degree of certainty than would normally occur during a year without an El Niño. And that’s important information for everyone involved in the agribusiness, including those who invest in it.

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    Is This a Window of Opportunity for Emerging-Market Currencies?

    May 22, 2015 10:40 AM by Leah G. Traub, Ph.D.

    The European Central Bank’s continuing commitment to quantitative easing eventually will boost the economies of emerging markets and support their currencies.

    With the European Central Bank’s (ECB) ongoing commitment to quantitative easing, we do not expect much more euro appreciation versus the U.S. dollar.  But a window of opportunity for emerging-market (EM) currencies versus the euro may be  on the horizon. And the recent support for EM currencies versus the U.S dollar remains in play, at least for the short term.

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    Market Sentiment Sinks the Ruble

    December 23, 2014 9:08 AM by Leah G. Traub, Ph.D.

    Market contagion, however, should be limited.

    When a country is facing a currency crisis, as clearly Russia is, an interest-rate hike alone, with no other measures, is a sign of desperation and a lack of understanding of the underlying situation. So it was not surprising when the market punished the ruble following a late-night decision on Monday, December 15, by the Russian central bank to hike a key interest rate by 650 basis points, to 17%. 

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    Weighing the Pluses and Minuses of a Commodities Downturn

    November 3, 2014 12:30 PM by Leah G. Traub, Ph.D.

    Sure, sharp drops in commodities prices have hurt major producing countries that have not been able to diversify their economies away from commodities, but heavy importers should benefit.   

    People forget that more than half of the emerging markets universe is comprised of commodity importers. These countries are not just exporters, which generally suffer when commodity prices drop, and the market will start to differentiate if the price declines continue. One prime example is India, which should benefit tremendously from lower commodity prices, as at least 50% of India’s total imports are commodities. So should Turkey, which hasn’t been able to implement any kind of structural reforms to control its current account deficit that is dominated by an oil imbalance. 

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    Time for Emerging Markets to Enter Decouple Counseling?

    October 31, 2014 10:40 AM by Leah G. Traub, Ph.D.

    While emerging markets have continued to outpace developed markets, the differences in economic policies have been dramatic

    Looking back at the third quarter, investors were struck by how much the policies of developed and emerging markets have diverged from one country to another. While the U.S. Federal Reserve and the Bank of England are generally expected to hike interest rates in the next six to nine months, the European Central Bank (ECB) is cutting interest rates and beginning a quantitative-easing program of its own. The Bank of Japan, meanwhile, may have to enlarge its quantitative-easing program.

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    Investing in Russia with "Putin Risk"

    October 29, 2014 11:25 AM by Leah G. Traub, Ph.D.

    While the ruble has been battered for months by risk aversion toward Russian assets caused by the conflict in Ukraine, yields on some government bonds remain attractive.  

    When it comes to managing Lord Abbett’s emerging markets currency and emerging markets local bond funds, while supporting the firm’s currency-hedging strategies, political risk often goes with the territory, especially in Russia, where markets have gyrated wildly this year.

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    Brazil at a Crossroads

    October 21, 2014 11:12 AM by Leah G. Traub, Ph.D.

    Investors are looking for much needed reforms after Brazil’s elections on Sunday. 

    No matter which hot spot is on the front burner, our investment team assesses how political risk affects a country’s economic underpinnings. Typical questions include: How strong is the country’s central bank? Is it independent from whatever political turmoil might be unfolding at the time? If it is, can it intervene to support the local currency?

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    Emerging Market Currencies and the Low Volatility Conundrum

    July 28, 2014 4:50 PM by Leah G. Traub, Ph.D.

    Markets can expect volatility to return at some point. The question is when—and what will be the catalyst?  

    Why is market volatility so low? It’s a conundrum that’s affecting more than just currencies. Every measure of volatility in the financial markets—including the most widely used measure of stock market swings, the CBOE Volatility Index or "VIX"—is at or approaching record lows. In currency markets, volatility1 is almost "missing in action." Even the tragic news of a Malaysian Airlines passenger jet being downed by a surface-to-air missile over Ukrainian territory—seemingly an escalation of the Russian/Ukrainian conflict—failed to disturb the apparent complacency of market participants for more than a few hours. The Russian ruble fell against the dollar as the news broke, but was back to its recent levels by the next morning.

    What to make of all this?

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