equity markets

 
 

Pound plunges after no-deal Brexit fears rise, boosting dollar

NEW YORK, Sept 22 — Sterling plunged yesterday, driving the US dollar up, after fears rose that Britain would leave the European Union without a trade deal. British Prime Minister Theresa May said yesterday the European Union must supply an…


Receding trade fears propel stocks to six-month peak

NEW YORK, Sept 22 — The US dollar rebounded and world shares hit a six-month high yesterday after China’s moves to boost domestic consumption bolstered a rally driven by investor bets that the latest US-China trade dispute was unlikely to dent…


Bursa Malaysia ends higher on continued buying momentum

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KUALA LUMPUR, Sept 20 — Bursa Malaysia ended higher for the second consecutive day today on continued buying interest in selected heavyweights and finance counters, and in line with most regional bourses, dealers said. The benchmark FTSE Bursa Malaysia KLCI (FBM KLCI) rose 2.99 points to close at 1,803.70 versus yesterday’s 1,800.70. After opening 3.30 points higher at 1,804.01 today, the index moved between 1,803.06 and 1,810.21 throughout the day. On the broader market, losers led gainers 412 to 402, with 408 counters unchanged, 659 untraded and 28 others suspended.Read More


Global stocks rally for a second day, setting aside trade fears

NEW YORK, Sept 20 ― World stock markets rallied for a second straight day yesterday, while safe-haven assets such as US bonds and the Japanese yen slipped to multi-week lows on bets the ongoing US-China trade spat would inflict less damage than…


Family businesses outperform equity markets

KUCHING: Family-owned businesses outperform broader equity markets across every region and sector on a long-term basis, according to the ‘Credit Suisse Family 1000 in 2018’ report, published by the Credit Suisse Research Institute (CSRI). In a statement, CSRI saw that that family-owned businesses deliver stronger revenue growth in all regions and higher levels of profitability, […]


US stocks dip on report of more tariffs on China

NEW YORK, Sept 17 — Wall Street stocks dipped early today, joining other equity markets in moving lower following a report the United States plans more tariffs on China.  About 10 minutes into trading, the Dow Jones Industrial Average was…


Recession on the horizon?

LONDON: Emerging market investors are trying to gauge whether a currency crisis and the steep interest rate increases being used to fight it could turn into a broader slowdown and even recession.

Last Thursday, Turkey’s central bank attempted to draw a line under a lira collapse of almost 40% this year by raising interest rates more than 6 percentage points to 24%.

Argentina is struggling to shore up its peso, which has more than halved in value despite punitive interest rate rises to 60%.

Other currencies have been caught in the slipstream, with India’s rupee plumbing record lows and South Africa’s rand, Russia’s rouble and Brazil’s real losing 15-20% this year so far.

Signs are appearing that months of market turmoil are starting to take the toll on real economies. South Africa unexpectedly entered recession in the second quarter of this year, Argentina is predicted to follow suit and Turkey is now widely forecast to experience a hard landing over the next year.

So what is growth like in these countries right now, what signs are there of a shock to business and consumer confidence and has the near sudden stop in investment flows seen 2019 economic forecasts deteriorate markedly?

Purchasing manager indexes have suffered sharp drops across many developing nations, according to data earlier in the month.

“When you have an environment where (the) US dollar is strengthening and US front-end rates are going up that tightens external financial conditions for emerging markets, especially for the deficit economies,” said Murat Ulgen, global head of emerging markets research at HSBC.

Meanwhile faced with capital outflows, many emerging market policy makers have opted to hike rates, thereby also tightening domestic financial conditions, Ulgen added.

“Given that markets have been volatile, generally speaking, and rates have been higher and equity markets have been lower in summer months … it is highly likely that financial conditions are still staying in the negative territory,” he said.

Having tumbled some 22% from their January peaks, emerging equity markets are in territory commonly regarded as a bear market, is often considered to be self-sustaining decline.

“Tighter financial conditions are going to weigh on economic activity going forward,” predicted Ulgen.

Emerging markets are familiar with such crises.

The Institute of International Finance found nine episodes since 1980 where when real exchange rates fell 30% or more, the devaluation was sustained for at least three years and the decline did not reverse a previous overvaluation.

Mexico suffered such a fate in 1995, Indonesia and Russia in 1998 and Brazil a year later. Meanwhile Argentina and Uruguay recorded such declines in 2002, Egypt in 2003 and 2016 and Ukraine in 2014.

A weaker currency helps close balance of payments gaps by boosting export competitiveness but also by pinching domestic purchasing power while tighter credit saps demand and growth.

What’s more, analysts are also closely assessing the impact of a growing number of trade conflicts and tariffs on emerging economies, which have seen trade become an increasingly important factors in generating economic activity.

Meanwhile capital flows will play a key role in how the most vulnerable economies will weather the latest crisis.

Last year saw healthy flows into emerging markets, according to HSBC, which estimates that in 2017 bond markets saw inflows of US$70 billion while equity flows were US$65 billion.

Following a healthy start to 2018, emerging bond markets have suffered a full reversal of flows; equity markets have seen just under half of the US$55 billion that had come in until the end of May leave again, HSBC found.

Luis Organes at JPMorgan warned that a “sudden stop” or abrupt reduction in capital flows into emerging markets and associated negative feedback loops should bring an extended period of adjustment for countries running a large current account deficit. – Reuters


Emerging markets grapple with currency crisis, steep interest rate hikes

LONDON: Emerging market investors are trying to gauge whether a currency crisis and the steep interest rate increases being used to fight it could turn into a broader slowdown and even recession.

Last Thursday, Turkey’s central bank attempted to draw a line under a lira collapse of almost 40% this year by raising interest rates more than 6 percentage points to 24%.

Argentina is struggling to shore up its peso, which has more than halved in value despite punitive interest rate rises to 60%.

Other currencies have been caught in the slipstream, with India’s rupee plumbing record lows and South Africa’s rand, Russia’s rouble and Brazil’s real losing 15-20% this year so far.

Signs are appearing that months of market turmoil are starting to take the toll on real economies. South Africa unexpectedly entered recession in the second quarter of this year, Argentina is predicted to follow suit and Turkey is now widely forecast to experience a hard landing over the next year.

So what is growth like in these countries right now, what signs are there of a shock to business and consumer confidence and has the near sudden stop in investment flows seen 2019 economic forecasts deteriorate markedly?

Purchasing manager indexes have suffered sharp drops across many developing nations, according to data earlier in the month.

“When you have an environment where (the) US dollar is strengthening and US front-end rates are going up that tightens external financial conditions for emerging markets, especially for the deficit economies,” said Murat Ulgen, global head of emerging markets research at HSBC.

Meanwhile faced with capital outflows, many emerging market policy makers have opted to hike rates, thereby also tightening domestic financial conditions, Ulgen added.

“Given that markets have been volatile, generally speaking, and rates have been higher and equity markets have been lower in summer months … it is highly likely that financial conditions are still staying in the negative territory,” he said.

Having tumbled some 22% from their January peaks, emerging equity markets are in territory commonly regarded as a bear market, is often considered to be self-sustaining decline.

“Tighter financial conditions are going to weigh on economic activity going forward,” predicted Ulgen.

Emerging markets are familiar with such crises.

The Institute of International Finance found nine episodes since 1980 where when real exchange rates fell 30% or more, the devaluation was sustained for at least three years and the decline did not reverse a previous overvaluation.

Mexico suffered such a fate in 1995, Indonesia and Russia in 1998 and Brazil a year later. Meanwhile Argentina and Uruguay recorded such declines in 2002, Egypt in 2003 and 2016 and Ukraine in 2014.

A weaker currency helps close balance of payments gaps by boosting export competitiveness but also by pinching domestic purchasing power while tighter credit saps demand and growth.

What’s more, analysts are also closely assessing the impact of a growing number of trade conflicts and tariffs on emerging economies, which have seen trade become an increasingly important factors in generating economic activity.

Meanwhile capital flows will play a key role in how the most vulnerable economies will weather the latest crisis.

Last year saw healthy flows into emerging markets, according to HSBC, which estimates that in 2017 bond markets saw inflows of US$70 billion while equity flows were US$65 billion.

Following a healthy start to 2018, emerging bond markets have suffered a full reversal of flows; equity markets have seen just under half of the US$55 billion that had come in until the end of May leave again, HSBC found.

Luis Organes at JPMorgan warned that a “sudden stop” or abrupt reduction in capital flows into emerging markets and associated negative feedback loops should bring an extended period of adjustment for countries running a large current account deficit. – Reuters


Stocks inch off three-week lows but little respite for emerging markets

LONDON, Sept 12 — Fresh sparring between Washington and Beijing over trade kept world stocks close to three-week lows today, while a slight dollar pullback gave little respite to emerging markets, with the Indian rupee plumbing new record lows….


Frictions in global trade order – and what this spells for Malaysia

US’ trade protectionism agenda is causing more problems than solutions for many of its trade allies – and the rest of the world. As one of the strongest and most influential economy, its new global trade policies and sanctions have rippled across the world, with its impact felt most by emerging markets (EM). Malaysia is […]