Politics, Fed could whip up new emerging markets storm

Comment on this story


Bullsandbears

REUTERS

A bull and a bear styrofoam figurine.

London - A stabilisation in emerging markets after January's rout may turn out be the calm before the storm if political flare-ups and Fed policies provide the spark for the next round of selling.

Currencies in Turkey, South Africa, Hungary and Russia, which suffered violent sell-offs over the past month, have recovered slightly, partly because central banks have fought back via interest rates hikes or exchange rate interventions.

Investors also appear more sanguine about the US Federal Reserve's plan to steadily withdraw monetary stimulus, a stance confirmed by its chair Janet Yellen this week.

But the next stress points are already emerging.

Some investors are bracing for the “April tipping point”, when the Fed's stimulus withdrawal in real terms is expected to start having a more material impact on the economy.

“Another catalyst will be political uncertainty, with many of the deficit countries facing elections in 2014,” said Gautam Chadda, director of investment consulting at RBC Wealth Management.

That includes the capital-hungry “Fragile Five” countries, voters in all of which are due to pass judgment on their governments this year.

“Markets don't like uncertainty and there is a lot of political uncertainty out there,” said Chadda, who expects pressure on emerging markets to return as the Fed scales back its asset-purchases over the course of the year.

And if turbulence has ebbed in markets such as Turkey and India, it appears to be spreading to other parts of the developing world.

For instance, markets in commodity exporting Nigeria, which is sensitive to China's growth and until recently a top frontier market investment destinations, have tumbled.

The naira has hit two-year lows after President Goodluck Jonathan sacked four cabinet members ahead of next year's general election, and its weakness has been only partly stemmed by central bank intervention.

A weaker currency worsens the inflation outlook for Nigeria which depends on imports for almost 80 percent of goods sold in the country.

The cedi currency of another African commodity exporter Ghana, has also fallen to record lows.

 

FALLING RESERVES

Nigeria is also an example of an emerging economy that is seeing a steady depletion in its hard currency reserves - its cash pile has fallen 7 percent over the past year.

Reserves fell in 11 out of 17 key emerging economies, including Russia, South Africa and Indonesia, in the year to January, as once-buoyant investment inflows dwindle and trade with a slowing China declines.

That in turn undermines the ability of central banks to support currencies under pressure.

Michael Howell, managing director of CrossBorder Capital, said recent poor economic data out of China is a reminder for investors of the sensitivity of many emerging markets to the world's second-biggest economy.

“Is the crisis over? It's not. Real exchange rates of emerging markets have to come down further,” Howell said.

“Which banana skin are you going to slip on? I believe it would be weak economic data coming out of China or signs of FX reserves to start falling significantly.”

He noted that Britain and the United States had recovered faster from Great Depression in the 1930s than France, which prioritised monetary discipline.

That could set the stage for a round of beggar-thy-neighbour competitive currency devaluations in emerging markets.

Kazakhstan may already have started it, with its 19 percent tenge devaluation this week.

That move was motivated by weakness in the rouble of Russia, Kazakhstan's key trade partner.

“The shining lesson from the 1930s is that those countries that devalued currencies first got out quickly. (Kazakhstan) is following the script,” Howell said.

 

TIPPING POINT

The Federal Reserve's winding-down stimulus, which began in December, has so far not significantly driven up US bond yields, which remain below levels seen in May-June last year.

But it may simply be that the real effect of tapering has not kicked in yet, because as the economy recovers and the US budget deficit shrinks, the Treasury is issuing less debt.

Stephen Jen, managing partner of SLJ Macro Partners says that until the Fed's monthly bond-buying falls below $55 billion, tapering will not have a real impact, relative to total bond sales.

“The Fed's tapering will only catch up to the Treasury's tapering by April or so,” Jen said.

“This may help explain why equity prices have been so well supported in Q4 2013 and early 2014, despite the Fed's decision to taper.” - Reuters


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

     

Join us on

IOL-Social networks IOL-Social networks IOL-Social networks IOL-Social networks
MustLoveDogz
I'm a 33 year old woman looking to meet men between the ages of 33 and 43.
View Profile
Athena
I'm a 37 year old woman looking to meet men between the ages of 37 and 45.
View Profile
Mianli
I'm a 31 year old woman looking to meet men between the ages of 32 and 45.
View Profile
Gem31
I'm a 24 year old woman looking to meet men between the ages of 25 and 35.
View Profile
lookingsexy200
I'm a 36 year old woman looking to meet men between the ages of 34 and 45.
View Profile
Sparkie92
I'm a 22 year old woman looking to meet men between the ages of 22 and 29.
View Profile
AM1234
I'm a 41 year old woman looking to meet men between the ages of 38 and 46.
View Profile
Bella_11
I'm a 33 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Stiletto1
I'm a 53 year old woman looking to meet men between the ages of 47 and 57.
View Profile
AGX
I'm a 36 year old woman looking to meet men between the ages of 35 and 44.
View Profile
SKY248
I'm a 52 year old woman looking to meet men between the ages of 44 and 52.
View Profile
Gem24
I'm a 24 year old woman looking to meet men between the ages of 25 and 40.
View Profile
Charms1203
I'm a 39 year old woman looking to meet men between the ages of 35 and 55.
View Profile
KiTella
I'm a 31 year old woman looking to meet men between the ages of 29 and 42.
View Profile
SkyLark67
I'm a 47 year old woman looking to meet men between the ages of 45 and 55.
View Profile
AmaJ
I'm a 44 year old woman looking to meet men between the ages of 42 and 50.
View Profile
blondgirl
I'm a 57 year old woman looking to meet men between the ages of 53 and 60.
View Profile
chicky582
I'm a 25 year old woman looking to meet men between the ages of 25 and 30.
View Profile
ddb65
I'm a 49 year old woman looking to meet men between the ages of 50 and 62.
View Profile
voelkos
I'm a 54 year old woman looking to meet men between the ages of 45 and 56.
View Profile
Comet43
I'm a 43 year old woman looking to meet men between the ages of 40 and 54.
View Profile
OneWay
I'm a 39 year old woman looking to meet men between the ages of 35 and 47.
View Profile
Isolabelle
I'm a 38 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Grace62
I'm a 33 year old woman looking to meet men between the ages of 33 and 42.
View Profile
00butterflygirl00
I'm a 30 year old woman looking to meet men between the ages of 28 and 36.
View Profile
TLCfree2bmex3
I'm a 33 year old woman looking to meet men between the ages of 32 and 39.
View Profile
Liefterdiefter
I'm a 48 year old woman looking to meet men between the ages of 45 and 63.
View Profile
HoopvolleToekoms
I'm a 32 year old woman looking to meet men between the ages of 32 and 39.
View Profile
iamclassy
I'm a 43 year old woman looking to meet men between the ages of 50 and 62.
View Profile
Poppielap007
I'm a 23 year old woman looking to meet men between the ages of 25 and 29.
View Profile
mystiqueZN
I'm a 29 year old woman looking to meet men between the ages of 27 and 45.
View Profile
KarooBoereMeisie
I'm a 34 year old woman looking to meet men between the ages of 30 and 40.
View Profile
butterflykisses14
I'm a 30 year old woman looking to meet men between the ages of 31 and 51.
View Profile
dreamsoftly
I'm a 49 year old woman looking to meet men between the ages of 47 and 58.
View Profile
Elyn1980
I'm a 34 year old woman looking to meet men between the ages of 35 and 42.
View Profile
ContagiousLaughter
I'm a 41 year old woman looking to meet men between the ages of 37 and 44.
View Profile
Stella143
I'm a 35 year old woman looking to meet men between the ages of 34 and 45.
View Profile
Ldp123
I'm a 43 year old woman looking to meet men between the ages of 44 and 58.
View Profile
Jasmayn
I'm a 56 year old woman looking to meet men between the ages of 55 and 65.
View Profile
veldmuis007
I'm a 33 year old woman looking to meet men between the ages of 28 and 35.
View Profile
Bubblegumskunk
I'm a 40 year old woman looking to meet men between the ages of 35 and 43.
View Profile
blom788
I'm a 25 year old woman looking to meet men between the ages of 25 and 35.
View Profile
Natz79
I'm a 35 year old woman looking to meet men between the ages of 30 and 45.
View Profile
HottFoxx
I'm a 46 year old woman looking to meet men between the ages of 40 and 55.
View Profile
noirsette
I'm a 38 year old woman looking to meet men between the ages of 37 and 45.
View Profile
_Alwayssmiling
I'm a 30 year old woman looking to meet men between the ages of 30 and 41.
View Profile
PhoenixLin
I'm a 32 year old woman looking to meet men between the ages of 25 and 42.
View Profile
ioio
I'm a 37 year old woman looking to meet men between the ages of 35 and 45.
View Profile
Lvit2C
I'm a 29 year old woman looking to meet men between the ages of 27 and 39.
View Profile
Viv42
I'm a 42 year old woman looking to meet men between the ages of 38 and 55.
View Profile
stofvoetjie
I'm a 18 year old woman looking to meet men between the ages of 18 and 25.
View Profile
FancyFace32
I'm a 32 year old woman looking to meet men between the ages of 37 and 58.
View Profile
lenQ313
I'm a 19 year old woman looking to meet men between the ages of 22 and 28.
View Profile
Lulu_101
I'm a 36 year old woman looking to meet men between the ages of 38 and 45.
View Profile
Fordfiest1
I'm a 42 year old woman looking to meet men between the ages of 35 and 50.
View Profile
Lemoenbloeisel
I'm a 35 year old woman looking to meet men between the ages of 32 and 42.
View Profile
bluemon
I'm a 30 year old woman looking to meet men between the ages of 30 and 45.
View Profile
lovely00
I'm a 32 year old woman looking to meet men between the ages of 39 and 67.
View Profile
LuckyCharm_440
I'm a 29 year old woman looking to meet men between the ages of 29 and 40.
View Profile
Kosmos075
I'm a 39 year old woman looking to meet men between the ages of 35 and 55.
View Profile
Wonderer_0202
I'm a 42 year old woman looking to meet men between the ages of 40 and 52.
View Profile
love_passionately
I'm a 43 year old woman looking to meet men between the ages of 45 and 55.
View Profile
itu22
I'm a 22 year old woman looking to meet men between the ages of 25 and 37.
View Profile
Boulderhopper
I'm a 44 year old woman looking to meet men between the ages of 38 and 50.
View Profile
Lady66
I'm a 48 year old woman looking to meet men between the ages of 47 and 55.
View Profile
Tamtam31
I'm a 31 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Bizkit2808
I'm a 38 year old woman looking to meet men between the ages of 25 and 45.
View Profile
Kwarenina
I'm a 47 year old woman looking to meet men between the ages of 42 and 52.
View Profile
Smarag
I'm a 20 year old woman looking to meet men between the ages of 22 and 30.
View Profile
Believer001
I'm a 30 year old woman looking to meet men between the ages of 32 and 40.
View Profile
Groenoognooi_46
I'm a 47 year old woman looking to meet men between the ages of 44 and 52.
View Profile
spangled_sparrow
I'm a 50 year old woman looking to meet men between the ages of 45 and 55.
View Profile
LOVINGLIFE417
I'm a 45 year old woman looking to meet men between the ages of 43 and 50.
View Profile
Sugababe
I'm a 41 year old woman looking to meet men between the ages of 32 and 42.
View Profile
Lizzzzz
I'm a 28 year old woman looking to meet men between the ages of 28 and 35.
View Profile
AMy_303
I'm a 39 year old woman looking to meet men between the ages of 35 and 45.
View Profile
J_Bean
I'm a 30 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Graciousheart
I'm a 47 year old woman looking to meet men between the ages of 44 and 56.
View Profile
GWTFT
I'm a 41 year old woman looking to meet men between the ages of 40 and 48.
View Profile
CC82
I'm a 32 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Chanex
I'm a 20 year old woman looking to meet men between the ages of 23 and 26.
View Profile
Verlore13
I'm a 27 year old woman looking to meet men between the ages of 25 and 32.
View Profile
JustLooking69
I'm a 56 year old woman looking to meet men between the ages of 50 and 60.
View Profile
supe24
I'm a 34 year old woman looking to meet men between the ages of 35 and 65.
View Profile
KissFromARose
I'm a 58 year old woman looking to meet men between the ages of 55 and 64.
View Profile
Juliet8
I'm a 50 year old woman looking to meet men between the ages of 45 and 65.
View Profile
Ja9
I'm a 26 year old woman looking to meet men between the ages of 26 and 36.
View Profile
Diena_van_die_Eike
I'm a 49 year old woman looking to meet men between the ages of 49 and 62.
View Profile
DelightfullyTipsy
I'm a 38 year old woman looking to meet men between the ages of 30 and 38.
View Profile
Dreamer1987
I'm a 27 year old woman looking to meet men between the ages of 25 and 35.
View Profile
MonaLisa100
I'm a 45 year old woman looking to meet men between the ages of 40 and 50.
View Profile
kim2702
I'm a 46 year old woman looking to meet men between the ages of 38 and 50.
View Profile
Pretty_Nerd
I'm a 28 year old woman looking to meet men between the ages of 30 and 37.
View Profile
AngelBabe1
I'm a 27 year old woman looking to meet men between the ages of 25 and 39.
View Profile
DaffodilTulip
I'm a 48 year old woman looking to meet men between the ages of 40 and 50.
View Profile
Belind4_M
I'm a 19 year old woman looking to meet men between the ages of 19 and 30.
View Profile
thrillsandfrills
I'm a 40 year old woman looking to meet men between the ages of 41 and 45.
View Profile
Sosialemeis2
I'm a 28 year old woman looking to meet men between the ages of 35 and 46.
View Profile
brokenheart2_cnb
I'm a 42 year old woman looking to meet men between the ages of 35 and 45.
View Profile
This_is_m3
I'm a 45 year old woman looking to meet men between the ages of 45 and 50.
View Profile
philip_unplugged514
I'm a 62 year old man looking to meet women between the ages of 50 and 65.
View Profile
Kenfisha123
I'm a 49 year old man looking to meet women between the ages of 35 and 55.
View Profile
Carden
I'm a 32 year old man looking to meet women between the ages of 24 and 30.
View Profile
Fairtalk101
I'm a 46 year old man looking to meet women between the ages of 25 and 45.
View Profile
oldschool_romantic
I'm a 26 year old man looking to meet women between the ages of 19 and 31.
View Profile
NAS3000
I'm a 59 year old man looking to meet women between the ages of 43 and 53.
View Profile
TheRisingSun
I'm a 41 year old man looking to meet women between the ages of 25 and 40.
View Profile
oth1982
I'm a 32 year old man looking to meet women between the ages of 18 and 100.
View Profile
big_guy_soft_heart
I'm a 43 year old man looking to meet women between the ages of 30 and 42.
View Profile
LiveLifeAlways
I'm a 43 year old man looking to meet women between the ages of 33 and 41.
View Profile
Stressfree
I'm a 58 year old man looking to meet women between the ages of 42 and 52.
View Profile
BobTheExtremeBuilder
I'm a 47 year old man looking to meet women between the ages of 25 and 47.
View Profile
Breukes
I'm a 35 year old man looking to meet women between the ages of 26 and 35.
View Profile
maybe_111
I'm a 41 year old man looking to meet women between the ages of 23 and 39.
View Profile
Bushbaby210
I'm a 27 year old man looking to meet women between the ages of 21 and 35.
View Profile
Rich_H
I'm a 48 year old man looking to meet women between the ages of 25 and 48.
View Profile
Deipnosophist
I'm a 40 year old man looking to meet women between the ages of 18 and 100.
View Profile
Holomig
I'm a 37 year old man looking to meet women between the ages of 28 and 36.
View Profile
GenuineJ
I'm a 64 year old man looking to meet women between the ages of 48 and 64.
View Profile
Geard1977
I'm a 37 year old man looking to meet women between the ages of 27 and 38.
View Profile
boersoekvrou14
I'm a 39 year old man looking to meet women between the ages of 30 and 42.
View Profile
peyton515
I'm a 46 year old man looking to meet women between the ages of 36 and 46.
View Profile
rossi46
I'm a 66 year old man looking to meet women between the ages of 55 and 65.
View Profile
Rumrun
I'm a 56 year old man looking to meet women between the ages of 44 and 56.
View Profile
Espavo
I'm a 50 year old man looking to meet women between the ages of 30 and 48.
View Profile
WieEnWaar
I'm a 63 year old man looking to meet women between the ages of 50 and 62.
View Profile
MOOLMAN
I'm a 56 year old man looking to meet women between the ages of 48 and 62.
View Profile
Glorious_Quest
I'm a 45 year old man looking to meet women between the ages of 32 and 45.
View Profile
Jazdaboss
I'm a 26 year old man looking to meet women between the ages of 25 and 45.
View Profile
Btt76
I'm a 38 year old man looking to meet women between the ages of 25 and 42.
View Profile
letslook
I'm a 46 year old man looking to meet women between the ages of 25 and 45.
View Profile
arew
I'm a 49 year old man looking to meet women between the ages of 30 and 55.
View Profile
srchinluv
I'm a 52 year old man looking to meet women between the ages of 46 and 65.
View Profile
Ben_57
I'm a 57 year old man looking to meet women between the ages of 42 and 55.
View Profile
MysticKitesurfer
I'm a 43 year old man looking to meet women between the ages of 27 and 36.
View Profile
MF__802
I'm a 38 year old man looking to meet women between the ages of 20 and 40.
View Profile
cornrlius205
I'm a 46 year old man looking to meet women between the ages of 30 and 50.
View Profile
Lifechanger_7
I'm a 25 year old man looking to meet women between the ages of 18 and 30.
View Profile
AJK1110
I'm a 59 year old man looking to meet women between the ages of 25 and 55.
View Profile
B_B_B
I'm a 43 year old man looking to meet women between the ages of 18 and 45.
View Profile
niemandsland
I'm a 30 year old man looking to meet men between the ages of 28 and 45.
View Profile
Woody777
I'm a 50 year old man looking to meet women between the ages of 35 and 55.
View Profile
ch_nb
I'm a 28 year old man looking to meet women between the ages of 18 and 45.
View Profile
Salerno
I'm a 52 year old man looking to meet women between the ages of 35 and 50.
View Profile
Gster1
I'm a 64 year old man looking to meet women between the ages of 45 and 60.
View Profile
TheDuke_99
I'm a 36 year old man looking to meet women between the ages of 28 and 42.
View Profile
tigercat
I'm a 54 year old man looking to meet women between the ages of 22 and 54.
View Profile
cloudhopper
I'm a 56 year old man looking to meet women between the ages of 45 and 55.
View Profile
umustbsomewhere
I'm a 61 year old man looking to meet women between the ages of 45 and 55.
View Profile
JONGKEREL
I'm a 62 year old man looking to meet women between the ages of 49 and 55.
View Profile
Pete_1
I'm a 70 year old man looking to meet women between the ages of 55 and 65.
View Profile
Rick1508
I'm a 49 year old man looking to meet women between the ages of 25 and 49.
View Profile
TheRealPeterPan
I'm a 35 year old man looking to meet women between the ages of 28 and 35.
View Profile
Travelbug_222
I'm a 76 year old man looking to meet women between the ages of 45 and 60.
View Profile
Double_N
I'm a 41 year old man looking to meet men between the ages of 25 and 50.
View Profile
gentlebutcrazy
I'm a 58 year old man looking to meet women between the ages of 35 and 55.
View Profile
Jurgy62
I'm a 52 year old man looking to meet women between the ages of 37 and 55.
View Profile
waitingforgodot
I'm a 68 year old man looking to meet women between the ages of 53 and 60.
View Profile
Rebelinbluejeans
I'm a 62 year old man looking to meet women between the ages of 40 and 62.
View Profile
bellagio
I'm a 69 year old man looking to meet women between the ages of 55 and 65.
View Profile
skyandsand
I'm a 31 year old man looking to meet women between the ages of 25 and 35.
View Profile
IceDad66
I'm a 48 year old man looking to meet women between the ages of 35 and 45.
View Profile
Stream_Net
I'm a 32 year old man looking to meet women between the ages of 24 and 33.
View Profile
CapeLover
I'm a 49 year old man looking to meet women between the ages of 41 and 50.
View Profile
DoctorSpin
I'm a 41 year old man looking to meet women between the ages of 30 and 45.
View Profile
WanderingShadow
I'm a 39 year old man looking to meet women between the ages of 20 and 40.
View Profile
QuietDreamer
I'm a 34 year old man looking to meet women between the ages of 25 and 35.
View Profile
drurie
I'm a 66 year old man looking to meet women between the ages of 60 and 66.
View Profile
Boereman
I'm a 52 year old man looking to meet women between the ages of 40 and 52.
View Profile
50pluslooking
I'm a 56 year old man looking to meet women between the ages of 18 and 100.
View Profile
koolstoof55
I'm a 59 year old man looking to meet women between the ages of 45 and 63.
View Profile
saks001
I'm a 61 year old man looking to meet women between the ages of 47 and 59.
View Profile
Free_Spirited
I'm a 45 year old man looking to meet women between the ages of 32 and 42.
View Profile
LEO1982
I'm a 32 year old man looking to meet women between the ages of 24 and 40.
View Profile
Apalis23
I'm a 50 year old man looking to meet women between the ages of 39 and 48.
View Profile
WagOngeduldig
I'm a 41 year old man looking to meet women between the ages of 30 and 45.
View Profile
matiekat
I'm a 66 year old man looking to meet women between the ages of 18 and 100.
View Profile
marcj4u
I'm a 48 year old man looking to meet women between the ages of 25 and 50.
View Profile
rio77
I'm a 56 year old man looking to meet women between the ages of 50 and 60.
View Profile
MrJay
I'm a 31 year old man looking to meet women between the ages of 25 and 36.
View Profile
DJStarglance
I'm a 55 year old man looking to meet women between the ages of 18 and 100.
View Profile
earthwormjim1968
I'm a 46 year old man looking to meet women between the ages of 40 and 48.
View Profile
deeptime
I'm a 53 year old man looking to meet women between the ages of 48 and 58.
View Profile
JustJve99
I'm a 47 year old man looking to meet women between the ages of 40 and 45.
View Profile
annns
I'm a 51 year old man looking to meet women between the ages of 48 and 56.
View Profile
Romanticseb
I'm a 59 year old man looking to meet women between the ages of 45 and 57.
View Profile
LoveFriendFirst123
I'm a 56 year old man looking to meet women between the ages of 50 and 72.
View Profile
honeybush_ht
I'm a 55 year old man looking to meet women between the ages of 25 and 45.
View Profile
Belligerent69
I'm a 45 year old man looking to meet women between the ages of 35 and 44.
View Profile
OldGoat4400
I'm a 53 year old man looking to meet women between the ages of 35 and 48.
View Profile
virgo5
I'm a 62 year old man looking to meet women between the ages of 45 and 65.
View Profile
MAX_33
I'm a 55 year old man looking to meet women between the ages of 33 and 53.
View Profile
Liefasb
I'm a 63 year old man looking to meet women between the ages of 50 and 60.
View Profile
Kent123
I'm a 54 year old man looking to meet women between the ages of 45 and 60.
View Profile
Yinyani
I'm a 57 year old man looking to meet women between the ages of 25 and 55.
View Profile
Summerstorm_007
I'm a 60 year old man looking to meet women between the ages of 48 and 58.
View Profile
happymaker66
I'm a 48 year old man looking to meet women between the ages of 25 and 45.
View Profile
Marley77
I'm a 37 year old man looking to meet women between the ages of 28 and 35.
View Profile
sailor_X897
I'm a 54 year old man looking to meet women between the ages of 35 and 60.
View Profile
Soulsearcher72
I'm a 42 year old man looking to meet women between the ages of 35 and 45.
View Profile

Business Directory