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Tag Archives: emerging markets

Contagion from Liquidity Crunch at Junk-Bond Funds to Trigger “Material Second Round Effects”: EU Securities Regulator

The costs of dodging negative interest rates. By Nick Corbishley, for WOLF STREET: In the event of a market shock, 40% of European funds focused on junk-rated bonds — ironically named “high-yield” funds — would not have enough liquid assets on hand to meet investor withdrawals, even if the withdrawals in one week amount to only 10% of the fund’s net asset value, the European Securities and Markets Authority (ESMA) warned this week, raising yet more concerns about the risks associated...

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Threat of Contagion to Eurozone from Spanish Banks’ Huge Bet on Emerging Markets: UBS

Spanish banks expanded aggressively into Emerging Markets to flee the consequences of the euro debt crisis. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. UBS has alerted that Spanish banks’ outsized exposure to Latin American markets could serve as a source of contagion for future crises: 80% of the Eurozone’s total banking exposure to the region is channeled through Spain whose banks have around €384 billion of counterparty claims in the region. A ‘shock’ in...

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Oops, Imports by China, Emerging Asia Plunge Most Since 2008

These unsettling tidbits about sudden problems on the demand-side in China. Imports by China and other emerging Asian economies in December plunged to the lowest level in two years, in the steepest one-month plunge since 2008, after having already plunged in November, according to the Merchandise World Trade Monitor, released on Monday by CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs. For November and December combined, imports by...

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The Wild East: Airlines in South & Southeast Asia

Huge aircraft orders, booming traffic, dozens of upstarts with easy mega-funding, fierce competition, already a big collapse, and allegations of shady business. By MC01, a frequent commenter, for WOLF STREET: As of October 31, Airbus had 6,245 members of the A320neo family on order, of which around 250 had already been delivered. Even taking into account the large discounts which are the norm for large orders, the estimated value for this order book alone was in the region of about...

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Aircraft Leasing Bubble in Trouble?

Alarming signals are coming from an unlikely place, the market that the industry long touted as an engine of infinite growth. By MC01, a frequent commenter, for WOLF STREET: In 1990, leased aircraft accounted for 15% of airline fleets. By 2017, the overall fleet of aircraft had ballooned, and within this much larger overall fleet size, the share of leased aircraft had surged to 40%. There are three general reasons why companies lease aircraft: To operate without the financial burden of...

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Bank Shares in Mexico (and Beyond) Plunge as Incoming Government Threatens Core Business: Fee Gouging

Part of a global trend, as exasperated consumers are squealing, but no country has threatened to do what Mexico proposed. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. Mexico’s stocks are plummeting, with the S&P/BMV IPC index down 5.8% on Thursday — the worst drop in seven years — and another 2.8% by midday on Friday. The dollar-denominated ETF, iShares MSCI Mexico [EWW], plunged 11% over the past three days and is down 22% since August 8: What happened?...

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I Was Asked: “How & When Will the Next Financial Crisis Happen?”

China has a lot of balls in the air at the moment. FocusEconomics asked me and a bunch of other illustrious luminaries, “How and when will the next financial crisis happen?” First things first. A “financial crisis” is somewhat of a latex-term that can be defined in many ways and stretched in many directions. For our purposes, a recession or a stock-market crash is by itself not a financial crisis. They’re more or less normal parts of the credit cycle – or the business cycle as it used...

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Amid Market Rout, Decade of “Financial Repression” Ends, Capital Preservation Suddenly is a Thing

This will dog the stock market going forward. Fixed-income investors – a financially conservative bunch buying Treasury securities, FDIC-insured CDs, and similar products that largely eliminate risk – have been getting crushed for a decade: Except for brief periods when inflation dipped to near zero or below zero, their minuscule returns have been eaten up by inflation, or worse, they lost money after inflation, as was the case with shorter-term Treasuries and just about all savings...

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US Dollar & Emerging Market Stocks: Big-Fat Gains Turn to Big-Fat Losses

“The tide is going out and investors are starting to worry about which EM economies have been swimming naked.” It was a nice risk-on party, but now is hangover time. Emerging Markets stocks, after some rough spots in 2015, had a great 2016 and an even better 2017. Last year, the MSCI Emerging Markets index soared 34%, outperforming even the S&P 500, which also had a great year, surging 18%. The Emerging Markets stock surge was powered by hot money from the Developed Markets, as the...

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Loans Sour in Turkey, Inflation Hits 25%, Interest Rates Spike, Fears of Contagion Rise

The economic miracle fueled by foreign-currency debt.  By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. The Bank of Turkey’s decision mid-September to hike its policy rate from 17.75% to 24% may have temporarily stemmed the rout in the Turkish lira, but the hiatus is now over. This week, the pressure is back on the nation’s currency, which is down almost 40% against the US dollar year to date, as well on its beleaguered banks, 20 of which were slapped with another...

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