21 Aug 2013
Flash: Why are EM trades performing so poorly? - HSBC
FXstreet.com (Barcelona) - Investors have been selling-off EM trades in recent weeks, with HSBC looking at a number of reasons for the latest rout in emerging markets.
Key Quotes
"First, the May-June sell-off saw some EM currencies experience severe losses, particularly in the BRL, IDR and INR, and in these cases it was more than simply the Fed tapering/higher US yields effect. Macro drivers in these countries have deteriorated with, in some cases, questionable policy responses."
"Second, China remains a source of concern, although recent data have shown some signs of the slowdown stabilising, helping to lift commodity prices. But the jury is still out on where Chinese growth will bottom out.
"The draw for developed markets may be growing too, with ongoing (albeit modest) improvements in US and European data."
Key Quotes
"First, the May-June sell-off saw some EM currencies experience severe losses, particularly in the BRL, IDR and INR, and in these cases it was more than simply the Fed tapering/higher US yields effect. Macro drivers in these countries have deteriorated with, in some cases, questionable policy responses."
"Second, China remains a source of concern, although recent data have shown some signs of the slowdown stabilising, helping to lift commodity prices. But the jury is still out on where Chinese growth will bottom out.
"The draw for developed markets may be growing too, with ongoing (albeit modest) improvements in US and European data."