The Daily Shot 6.23.16

By SoberLook

Greetings,

Let’s begin with emerging markets.

1. The Brazilian real is up around 20% year-to-date.  Impressive.

2. Argentina’s shares stage a rally on MSCI’s possible upgrade in its emerging-market index.

3. Colombia’s central bank raised the benchmark interest rate again. This last hike may be it for a while, especially if the Fed moves slowly.

4. Which EM currencies are most correlated with risk-on/risk-off market sentiment (thus vulnerable to Brexit)?

Source: HSBC

5. Barclays investor survey asks: “Which asset class do you think will provide the best return in the next three months?”. It shows investor preferences to rotate out of US equities into emerging markets and commodities.

Source: Barclays

7. In a Brexit scenario, EM Europe looks quite vulnerable.(CEE = Central and Eastern Europe).

Source: Morgan Stanley

8. Here are the cumulative flows into EM bond and equity funds since the beginning of 2015.

Source: HSBC

9. As discussed before, net bond issuance in China has declined sharply. Here is some color on the situation.

Credit Suisse: – We believe such material decline was mainly due to: (1) corporate bond default cases in industries with significant overcapacity surging during April-June and (2) rising expectation of supply-side reform after the interview of an “authoritative figure” (as reported in Bloomberg & other media sources in May).

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