Sweech

Hassle-FREE Online Campaigns On Sweech

Carry trade is the key as emerging markets rally

Comment on this story


Investors became cautious towards the end of last week after the recent record-breaking run on global equity markets. During Thursday’s trading session, the JSE all share index set a new record high of 49 886, nearly 19 percent up on the same date the previous year. This came after the Dow Jones industrial index hit its third consecutive record close of 16 715 on Tuesday.

But thereafter US stocks ran out of steam and markets globally were flat and mixed by Friday. The day’s pullback saw the JSE all share close at 49 159.77. However, the local bourse is still well up on the 46 256 seen at the end of last year and more than 18 percent higher than a year earlier.

The improvement is all down to the renewed popularity of emerging market shares.

David Stockman, on the website Contra Corner, said the benchmark MSCI emerging market index was recording a 7 percent return in dollars, compared with just 1 percent in developed markets.

He said this development was down to the carry trade – the practice of borrowing at relatively low interest rates and investing in high-yielding currencies, in developing economies.

He noted: “It hasn’t taken long for the rebound to flow through to stock markets. In local currency terms, an investor with an equally weighted allocation to each of the equity of the fragile five – Brazil, India, Indonesia, Turkey and South Africa – will already have seen his portfolio regain its previous high reached in May 2013.”

The carry trade buoyed the rand when developed economies slashed interest rates and flooded their markets with money, after the 2008/09 recession. But when the US Federal Reserve announced in May last year that it would end quantitative easing (QE) – a cheap money policy – the carry trade shrank.

And when the Fed started tapering QE, in January, capital washed out of emerging markets, with the rand among the worst casualties. Bloomberg’s index of 20 major emerging market currencies fell 3 percent in January, in the worst start to a year since 2009.

Since then emerging market currencies had seen the longest rally since 2009, Bloomberg said last week.

The change in sentiment came as the markets’ views on US monetary policy “matured”, according to independent economist Cees Bruggemans. This year the US Fed has been systematically mopping up liquidity at home, after five years of easy money, pushing US rates higher.

“But, the consequences after all didn’t turn out to be dire,” said Bruggemans. He noted there had not been “a continuous fast run-up in yields and the dollar. Instead, the whole transitioning remained incredibly benign”.

Stockman noted that the greater the sell-off a country suffered last year, the stronger the rally it had enjoyed this year.

“The fragile five , the markets most reliant on foreign capital and so most vulnerable last year, are no longer looking quite so fragile.”

The rand is a case in point.

“After a 30-month streak of non-stop weakening between mid-2011 and early 2014, taking the rand from near R7 to R11.40 (a 60 percent move), the early months of 2014 witnessed a pullback or correction, reaching R10.35,” Bruggemans said.

But the economic backdrop is gloomy. Manufacturing rose only 0.7 percent year on year in March, while mining production shrank 4.7 percent. Retail sales that month were up only 1 percent year on year. And unemployment climbed to 25.2 percent in the first quarter from 24.1 percent the previous quarter.

Annabel Bishop, the chief economist at the Investec group, warned: “Growth in gross domestic product is at risk of approaching the 1 percent mark this year after 1.9 percent last year, 2.5 percent in 2012 and 3.6 percent in 2011.”

She also noted the destructive impact of supply disruptions on the platinum mines, during a strike now in its 17th week.

The disappointing data and the disturbing scenario on the mines may stave off further interest rate hikes. Old Mutual Wealth’s Dave Mohr commented: “Interest-rate sensitive shares, such as banks, have rallied as the market has toned down its expectations for further rate hikes.”

The Reserve Bank’s monetary policy committee will decide this week whether to leave its repo rate at 5.5 percent or hike by 50 basis points for the second time.

But local data and local policy moves may have less impact on the market than global events. Much will depend on the unreliable carry trade.


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
Bella_11
I'm a 33 year old woman looking to meet men between the ages of 30 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
butterflykisses14
I'm a 30 year old woman looking to meet men between the ages of 31 and 51.
View Profile
AngelBabe1
I'm a 27 year old woman looking to meet men between the ages of 25 and 39.
View Profile
MustLoveDogz
I'm a 33 year old woman looking to meet men between the ages of 33 and 43.
View Profile
FancyFace32
I'm a 32 year old woman looking to meet men between the ages of 37 and 58.
View Profile
chicky582
I'm a 25 year old woman looking to meet men between the ages of 25 and 30.
View Profile
Lemoenbloeisel
I'm a 35 year old woman looking to meet men between the ages of 32 and 42.
View Profile
Kwarenina
I'm a 47 year old woman looking to meet men between the ages of 42 and 52.
View Profile
ioio
I'm a 37 year old woman looking to meet men between the ages of 35 and 45.
View Profile
Gem24
I'm a 24 year old woman looking to meet men between the ages of 25 and 40.
View Profile
Bubblegumskunk
I'm a 40 year old woman looking to meet men between the ages of 35 and 43.
View Profile
TLCfree2bmex3
I'm a 33 year old woman looking to meet men between the ages of 32 and 39.
View Profile
HoopvolleToekoms
I'm a 32 year old woman looking to meet men between the ages of 32 and 39.
View Profile
blom788
I'm a 25 year old woman looking to meet men between the ages of 25 and 35.
View Profile
Poppielap007
I'm a 23 year old woman looking to meet men between the ages of 25 and 29.
View Profile
DelightfullyTipsy
I'm a 38 year old woman looking to meet men between the ages of 30 and 38.
View Profile
Verlore13
I'm a 27 year old woman looking to meet men between the ages of 25 and 32.
View Profile
Belind4_M
I'm a 19 year old woman looking to meet men between the ages of 19 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
iamclassy
I'm a 43 year old woman looking to meet men between the ages of 50 and 62.
View Profile
mystiqueZN
I'm a 29 year old woman looking to meet men between the ages of 27 and 45.
View Profile
Smarag
I'm a 20 year old woman looking to meet men between the ages of 22 and 30.
View Profile
Darkangel_opiel
I'm a 45 year old woman looking to meet men between the ages of 40 and 55.
View Profile
blondgirl
I'm a 57 year old woman looking to meet men between the ages of 53 and 60.
View Profile
Dreamer1987
I'm a 27 year old woman looking to meet men between the ages of 25 and 35.
View Profile
Viv42
I'm a 42 year old woman looking to meet men between the ages of 38 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
KarooBoereMeisie
I'm a 34 year old woman looking to meet men between the ages of 30 and 40.
View Profile
Chanex
I'm a 20 year old woman looking to meet men between the ages of 23 and 26.
View Profile
OneWay
I'm a 39 year old woman looking to meet men between the ages of 35 and 47.
View Profile
MonaLisa100
I'm a 45 year old woman looking to meet men between the ages of 40 and 50.
View Profile
Juliet8
I'm a 50 year old woman looking to meet men between the ages of 45 and 65.
View Profile
itu22
I'm a 22 year old woman looking to meet men between the ages of 25 and 37.
View Profile
supe24
I'm a 34 year old woman looking to meet men between the ages of 35 and 65.
View Profile
tas1989
I'm a 25 year old woman looking to meet men between the ages of 24 and 40.
View Profile
ContagiousLaughter
I'm a 41 year old woman looking to meet men between the ages of 37 and 44.
View Profile
bluemon
I'm a 30 year old woman looking to meet men between the ages of 30 and 45.
View Profile
dreamsoftly
I'm a 49 year old woman looking to meet men between the ages of 47 and 58.
View Profile
stofvoetjie
I'm a 18 year old woman looking to meet men between the ages of 18 and 25.
View Profile
Ja9
I'm a 26 year old woman looking to meet men between the ages of 26 and 36.
View Profile
Natz79
I'm a 35 year old woman looking to meet men between the ages of 30 and 45.
View Profile
Athena
I'm a 37 year old woman looking to meet men between the ages of 37 and 45.
View Profile
thrillsandfrills
I'm a 40 year old woman looking to meet men between the ages of 41 and 45.
View Profile
KiTella
I'm a 31 year old woman looking to meet men between the ages of 29 and 42.
View Profile
SKY248
I'm a 52 year old woman looking to meet men between the ages of 44 and 52.
View Profile
kim2702
I'm a 46 year old woman looking to meet men between the ages of 38 and 50.
View Profile
AMy_303
I'm a 39 year old woman looking to meet men between the ages of 35 and 45.
View Profile
Isolabelle
I'm a 38 year old woman looking to meet men between the ages of 25 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
lookingsexy200
I'm a 36 year old woman looking to meet men between the ages of 34 and 45.
View Profile
Jasmayn
I'm a 56 year old woman looking to meet men between the ages of 55 and 65.
View Profile
Stella143
I'm a 35 year old woman looking to meet men between the ages of 34 and 45.
View Profile
LuckyCharm_440
I'm a 29 year old woman looking to meet men between the ages of 29 and 40.
View Profile
voelkos
I'm a 54 year old woman looking to meet men between the ages of 45 and 56.
View Profile
Gem31
I'm a 24 year old woman looking to meet men between the ages of 25 and 35.
View Profile
AGX
I'm a 36 year old woman looking to meet men between the ages of 35 and 44.
View Profile
Charms1203
I'm a 39 year old woman looking to meet men between the ages of 35 and 55.
View Profile
lovely00
I'm a 32 year old woman looking to meet men between the ages of 39 and 67.
View Profile
CC82
I'm a 32 year old woman looking to meet men between the ages of 30 and 45.
View Profile
JustLooking69
I'm a 56 year old woman looking to meet men between the ages of 50 and 60.
View Profile
Lizzzzz
I'm a 28 year old woman looking to meet men between the ages of 28 and 35.
View Profile
Grace62
I'm a 33 year old woman looking to meet men between the ages of 33 and 42.
View Profile
veldmuis007
I'm a 33 year old woman looking to meet men between the ages of 28 and 35.
View Profile
HottFoxx
I'm a 46 year old woman looking to meet men between the ages of 40 and 55.
View Profile
Lvit2C
I'm a 29 year old woman looking to meet men between the ages of 27 and 39.
View Profile
PhoenixLin
I'm a 32 year old woman looking to meet men between the ages of 25 and 42.
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
Pretty_Nerd
I'm a 28 year old woman looking to meet men between the ages of 30 and 37.
View Profile
Elyn1980
I'm a 34 year old woman looking to meet men between the ages of 35 and 42.
View Profile
Bizkit2808
I'm a 38 year old woman looking to meet men between the ages of 25 and 45.
View Profile
brokenheart2_cnb
I'm a 42 year old woman looking to meet men between the ages of 35 and 45.
View Profile
LOVINGLIFE417
I'm a 45 year old woman looking to meet men between the ages of 43 and 50.
View Profile
Tamtam31
I'm a 31 year old woman looking to meet men between the ages of 30 and 45.
View Profile
GWTFT
I'm a 41 year old woman looking to meet men between the ages of 40 and 48.
View Profile
00butterflygirl00
I'm a 30 year old woman looking to meet men between the ages of 28 and 36.
View Profile
Wonderer_0202
I'm a 42 year old woman looking to meet men between the ages of 40 and 52.
View Profile
Graciousheart
I'm a 47 year old woman looking to meet men between the ages of 44 and 56.
View Profile
Mianli
I'm a 31 year old woman looking to meet men between the ages of 32 and 45.
View Profile
AM1234
I'm a 41 year old woman looking to meet men between the ages of 38 and 46.
View Profile
SATYNTJIE
I'm a 52 year old woman looking to meet men between the ages of 45 and 60.
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
love_passionately
I'm a 43 year old woman looking to meet men between the ages of 45 and 55.
View Profile
KissFromARose
I'm a 58 year old woman looking to meet men between the ages of 55 and 64.
View Profile
Lady66
I'm a 48 year old woman looking to meet men between the ages of 47 and 55.
View Profile
SkyLark67
I'm a 47 year old woman looking to meet men between the ages of 45 and 55.
View Profile
Comet43
I'm a 43 year old woman looking to meet men between the ages of 40 and 54.
View Profile
spangled_sparrow
I'm a 50 year old woman looking to meet men between the ages of 45 and 55.
View Profile
Boulderhopper
I'm a 44 year old woman looking to meet men between the ages of 38 and 50.
View Profile
Sparkie92
I'm a 22 year old woman looking to meet men between the ages of 22 and 29.
View Profile
AmaJ
I'm a 44 year old woman looking to meet men between the ages of 42 and 50.
View Profile
Stiletto1
I'm a 53 year old woman looking to meet men between the ages of 47 and 57.
View Profile
DaffodilTulip
I'm a 48 year old woman looking to meet men between the ages of 40 and 50.
View Profile
lenQ313
I'm a 19 year old woman looking to meet men between the ages of 22 and 28.
View Profile
Sweet_Serenity
I'm a 35 year old woman looking to meet men between the ages of 33 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
ddb65
I'm a 49 year old woman looking to meet men between the ages of 50 and 62.
View Profile
Sugababe
I'm a 41 year old woman looking to meet men between the ages of 32 and 42.
View Profile
Apalis23
I'm a 50 year old man looking to meet women between the ages of 39 and 48.
View Profile
Woody777
I'm a 50 year old man looking to meet women between the ages of 35 and 55.
View Profile
Ben_57
I'm a 57 year old man looking to meet women between the ages of 42 and 55.
View Profile
bellagio
I'm a 69 year old man looking to meet women between the ages of 55 and 65.
View Profile
Pete_1
I'm a 70 year old man looking to meet women between the ages of 55 and 65.
View Profile
boersoekvrou14
I'm a 39 year old man looking to meet women between the ages of 30 and 42.
View Profile
50pluslooking
I'm a 56 year old man looking to meet women between the ages of 18 and 100.
View Profile
maybe_111
I'm a 41 year old man looking to meet women between the ages of 23 and 39.
View Profile
drurie
I'm a 66 year old man looking to meet women between the ages of 60 and 66.
View Profile
Holomig
I'm a 37 year old man looking to meet women between the ages of 28 and 36.
View Profile
Geard1977
I'm a 37 year old man looking to meet women between the ages of 27 and 38.
View Profile
Btt76
I'm a 38 year old man looking to meet women between the ages of 25 and 42.
View Profile
Gster1
I'm a 64 year old man looking to meet women between the ages of 45 and 60.
View Profile
WanderingShadow
I'm a 39 year old man looking to meet women between the ages of 20 and 40.
View Profile
OldGoat4400
I'm a 53 year old man looking to meet women between the ages of 35 and 48.
View Profile
Double_N
I'm a 41 year old man looking to meet men between the ages of 25 and 50.
View Profile
tigercat
I'm a 54 year old man looking to meet women between the ages of 22 and 54.
View Profile
arew
I'm a 49 year old man looking to meet women between the ages of 30 and 55.
View Profile
cornrlius205
I'm a 46 year old man looking to meet women between the ages of 30 and 50.
View Profile
Boereman
I'm a 52 year old man looking to meet women between the ages of 40 and 52.
View Profile
rio77
I'm a 56 year old man looking to meet women between the ages of 50 and 60.
View Profile
LoveFriendFirst123
I'm a 56 year old man looking to meet women between the ages of 50 and 72.
View Profile
waitingforgodot
I'm a 68 year old man looking to meet women between the ages of 53 and 60.
View Profile
MAX_33
I'm a 55 year old man looking to meet women between the ages of 33 and 53.
View Profile
BobTheExtremeBuilder
I'm a 47 year old man looking to meet women between the ages of 25 and 47.
View Profile
Romanticseb
I'm a 59 year old man looking to meet women between the ages of 45 and 57.
View Profile
rossi46
I'm a 66 year old man looking to meet women between the ages of 55 and 65.
View Profile
letslook
I'm a 46 year old man looking to meet women between the ages of 25 and 45.
View Profile
happymaker66
I'm a 48 year old man looking to meet women between the ages of 25 and 45.
View Profile
DoctorSpin
I'm a 41 year old man looking to meet women between the ages of 30 and 45.
View Profile
JustJve99
I'm a 47 year old man looking to meet women between the ages of 40 and 45.
View Profile
Liefasb
I'm a 63 year old man looking to meet women between the ages of 50 and 60.
View Profile
Deipnosophist
I'm a 40 year old man looking to meet women between the ages of 18 and 100.
View Profile
niemandsland
I'm a 30 year old man looking to meet men between the ages of 28 and 45.
View Profile
skyandsand
I'm a 31 year old man looking to meet women between the ages of 25 and 35.
View Profile
Free_Spirited
I'm a 45 year old man looking to meet women between the ages of 32 and 42.
View Profile
Kenfisha123
I'm a 49 year old man looking to meet women between the ages of 35 and 55.
View Profile
Breukes
I'm a 35 year old man looking to meet women between the ages of 26 and 35.
View Profile
matiekat
I'm a 66 year old man looking to meet women between the ages of 18 and 100.
View Profile
Yinyani
I'm a 57 year old man looking to meet women between the ages of 25 and 55.
View Profile
WieEnWaar
I'm a 63 year old man looking to meet women between the ages of 50 and 62.
View Profile
IceDad66
I'm a 48 year old man looking to meet women between the ages of 35 and 45.
View Profile
Rich_H
I'm a 48 year old man looking to meet women between the ages of 25 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
Rebelinbluejeans
I'm a 62 year old man looking to meet women between the ages of 40 and 62.
View Profile
QuietDreamer
I'm a 34 year old man looking to meet women between the ages of 25 and 35.
View Profile
LiveLifeAlways
I'm a 43 year old man looking to meet women between the ages of 33 and 41.
View Profile
Bushbaby210
I'm a 27 year old man looking to meet women between the ages of 21 and 35.
View Profile
cloudhopper
I'm a 56 year old man looking to meet women between the ages of 45 and 55.
View Profile
Kent123
I'm a 54 year old man looking to meet women between the ages of 45 and 60.
View Profile
Carden
I'm a 32 year old man looking to meet women between the ages of 24 and 30.
View Profile
sailor_X897
I'm a 54 year old man looking to meet women between the ages of 35 and 60.
View Profile
Rumrun
I'm a 56 year old man looking to meet women between the ages of 44 and 56.
View Profile
umustbsomewhere
I'm a 61 year old man looking to meet women between the ages of 45 and 55.
View Profile
TheRealPeterPan
I'm a 35 year old man looking to meet women between the ages of 28 and 35.
View Profile
amormeu
I'm a 100 year old man looking to meet women between the ages of 18 and 27.
View Profile
Marley77
I'm a 37 year old man looking to meet women between the ages of 28 and 35.
View Profile
NAS3000
I'm a 59 year old man looking to meet women between the ages of 43 and 53.
View Profile
Jurgy62
I'm a 52 year old man looking to meet women between the ages of 37 and 55.
View Profile
GenuineJ
I'm a 64 year old man looking to meet women between the ages of 48 and 64.
View Profile
Espavo
I'm a 50 year old man looking to meet women between the ages of 30 and 48.
View Profile
srchinluv
I'm a 52 year old man looking to meet women between the ages of 46 and 65.
View Profile
Travelbug_222
I'm a 76 year old man looking to meet women between the ages of 45 and 60.
View Profile
annns
I'm a 51 year old man looking to meet women between the ages of 48 and 56.
View Profile
DJStarglance
I'm a 55 year old man looking to meet women between the ages of 18 and 100.
View Profile
peyton515
I'm a 46 year old man looking to meet women between the ages of 36 and 46.
View Profile
marcj4u
I'm a 48 year old man looking to meet women between the ages of 25 and 50.
View Profile
oth1982
I'm a 32 year old man looking to meet women between the ages of 18 and 100.
View Profile
Rick1508
I'm a 49 year old man looking to meet women between the ages of 25 and 49.
View Profile
honeybush_ht
I'm a 55 year old man looking to meet women between the ages of 25 and 45.
View Profile
WagOngeduldig
I'm a 41 year old man looking to meet women between the ages of 30 and 45.
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
JONGKEREL
I'm a 62 year old man looking to meet women between the ages of 49 and 55.
View Profile
Stressfree
I'm a 58 year old man looking to meet women between the ages of 42 and 52.
View Profile
Glorious_Quest
I'm a 45 year old man looking to meet women between the ages of 32 and 45.
View Profile
Lifechanger_7
I'm a 25 year old man looking to meet women between the ages of 18 and 30.
View Profile
Belligerent69
I'm a 45 year old man looking to meet women between the ages of 35 and 44.
View Profile
TheRisingSun
I'm a 41 year old man looking to meet women between the ages of 25 and 40.
View Profile
ch_nb
I'm a 28 year old man looking to meet women between the ages of 18 and 45.
View Profile
CapeLover
I'm a 49 year old man looking to meet women between the ages of 41 and 50.
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
earthwormjim1968
I'm a 46 year old man looking to meet women between the ages of 40 and 48.
View Profile
Fairtalk101
I'm a 46 year old man looking to meet women between the ages of 25 and 45.
View Profile
TheDuke_99
I'm a 36 year old man looking to meet women between the ages of 28 and 42.
View Profile
Summerstorm_007
I'm a 60 year old man looking to meet women between the ages of 48 and 58.
View Profile
oldschool_romantic
I'm a 26 year old man looking to meet women between the ages of 19 and 31.
View Profile
Soulsearcher72
I'm a 42 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
Jazdaboss
I'm a 26 year old man looking to meet women between the ages of 25 and 45.
View Profile
MOOLMAN
I'm a 56 year old man looking to meet women between the ages of 48 and 62.
View Profile
philip_unplugged514
I'm a 62 year old man looking to meet women between the ages of 50 and 65.
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
gentlebutcrazy
I'm a 58 year old man looking to meet women between the ages of 35 and 55.
View Profile
MF__802
I'm a 38 year old man looking to meet women between the ages of 20 and 40.
View Profile
LEO1982
I'm a 32 year old man looking to meet women between the ages of 24 and 40.
View Profile
MrJay
I'm a 31 year old man looking to meet women between the ages of 25 and 36.
View Profile

Business Directory