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Friday, 6 June 2014

EM liquidity: the danger stalking global markets – beyondbrics - Blogs -

EM liquidity: the danger stalking global markets – beyondbrics - Blogs -

"“Emerging markets are where we can measure the deterioration of trading conditions. They are the warning for the rest of the market.”

So says Hung Tran, executive managing director of the Institute of International Finance. He has powerful data to back up his assertion. According to four key metrics, trading conditions have tightened dramatically over recent years, with especially sharp moves in recent months. Where emerging markets have led, the fear is, other global markets may follow.

As beyondbrics wrote last week, there is a host of anecdotal evidence to show that traders in EM assets are gripped in a liquidity squeeze. Now Tran and his colleague Sonja Gibbs, director of the IIF’s capital markets and emerging markets policy department, have run some numbers that add worrying substance to the talk on trading floors."

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Volatility, markets and monetary policy - YouTube

Volatility, markets and monetary policy - YouTube: ""

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Region’s biggest bond sale in 2014 set for pricing record |

Region’s biggest bond sale in 2014 set for pricing record |

"An impending bond issue by Etisalat may not only be the region’s largest deal so far this year, but also set a record for tight pricing as the Gulf becomes more of a mainstream investment destination.

Etisalat’s debut bond will replace some of the debt used to fund its 4.2 billion euro (Dh21 billion, $5.7 billion) purchase of a majority stake in Morocco’s Maroc Telecom from France’s Vivendi.

Investor roadshows are due to finish on June 10 and banking sources told Reuters earlier this week that the firm could then issue a four-tranche deal, consisting of five- and 10-year bonds denominated in US dollars and seven- and 12-year bonds denominated in euros.

The size has not been fixed but some bankers speculate that it will be between $2 billion and $3 billion — a level that would be easily absorbed by massive investor demand. The largest deal from the Gulf so far in 2014 was Saudi Electricity Co’s $2.5 billion, two-part sukuk in April."

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Pimco Using Ukraine Turmoil to Buy Cheap Russian Stocks - Bloomberg

Pimco Using Ukraine Turmoil to Buy Cheap Russian Stocks - Bloomberg:

"When some investors were fleeing Russian stocks as President Vladimir Putin moved to annex Crimea, Pacific Investment Management Co. (PEQWX) turned bullish.

The Newport Beach, California-based investment manager has been buying Russian equities amid a decline which, at the height of the conflict with Ukraine, pushed the average dividend yield for the benchmark Micex Index (INDEXCF) above its estimated 12-month price-to-earnings ratio for the first time since at least 2009.

“Over the past three months, we have used market volatility to increase or initiate positions in high-quality stocks that were sold down to distressed levels,” Masha Gordon, who oversees more than $2.5 billion in assets as the London-based head of emerging-market equities at Pimco, wrote in an e-mail yesterday.

The Micex’s dividend yield on March 14, the last trading day before Crimeans voted to join Russia, was 4.59 percent, while the gauge traded at 4.56 times estimated earnings, data compiled by Bloomberg show. Valuations slumping below payout levels can signal a buying opportunity to investors.

“The market’s dividend yield exceeded its” price-to-earnings ratio, Gordon said. “This is very unusual.”"

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Ruble Gains on ECB Seen Short-Lived to HSBC on Stalling Economy - Bloomberg

Ruble Gains on ECB Seen Short-Lived to HSBC on Stalling Economy - Bloomberg:

"The ruble’s appreciation following the European Central Bank’s interest-rate cuts will be short-lived as Russia’s economy stagnates, HSBC Holdings Plc said.

The ruble gained the most in three weeks, adding 0.7 percent to 47.2500 per euro by 6 p.m. yesterday in Moscow, when the central bank ends market operations. The advance pared its year-to-date depreciation to 4.4 percent versus the euro and 5.3 percent per dollar, the biggest drop among 24 emerging-market currencies tracked by Bloomberg after Argentina’s peso.

ECB President Mario Draghi yesterday reduced the deposit rate to minus 0.1 percent from zero in a bid to spur bank lending and boost the economy, making it the world’s first major central bank to use a negative rate. The ruble advanced along with many other east European assets on bets more capital would flow into higher-yielding and riskier assets."

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