Another week, another leg of the emerging-market rout.
Stocks were on course for their worst month since October, while currencies suffered their biggest weekly loss in a year, erasing gains for the year. Brazil’s real led the drop as protests added to political tensions and growth forecasts declined, followed by the rand in South Africa, whose pledge to keep Eskom afloat is weighing on the government’s debt.
There are no deadlines
for pressure on risky assets to ease, said Alejandro Cuadrado, a senior strategist at BBVA in New York.
Emerging currencies are starting to be quite cheap, but demand will be limited with uncertainty and the fact that even when we were pricing more benign scenarios, they didn’t perform
Cuadrado says that the Brazilian real could do worse in the near term, along with the Chilean peso. The Mexican peso and Peruvian sol are positioned to outperform.
The back-and-forth of trade negotiations between the US and China continues to be the main guide for markets as investors reassess the odds of a deal between the world’s two largest economies. The tone of the talks soured after the White House barred companies deemed a national security threat from selling to the US and threatened to blacklist Huawei Technologies from buying essential components. On Friday, China’s state media signaled a lack of interest in resuming trade talks with the USRead More
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