Market turmoils take their toll on most emerging markets
Most EM markets today were hammered as concerns over growth prospects in the US and Europe extend to the West’s main suppliers for commodities and credit. Yet Idiosyncratic factors also seem to play their part in what EM nationals qualified as ‘market panic’.
Russian stocks and the rouble see their main stocks trajectory linked to that of its main commodity, oil, reflecting accrued dependence on commodities at large, loosing 24 per cent over the last six sessions.
Ankara, with little (Turkish) delight, contemplates a comparable fall in its equities, as the trend revealed decreasing confidence in the country’s ability to fill a yawning current account deficit, alarm over its overheating economy, and confusion over the policy of its increasingly eccentric central bank. Stocks fell 7 per cent yesterday.
Brazil is the worst hit, however. Its overheating economy seems left in the cold as capital flee the country, with Bovespa, the stock exchange, closing 9.75 per cent down yesterday. Investors, citing concerns over the dominance of commodity exporters among Brazil’s biggest listed companies, ditch their Real denominated assets.
Ironically, Brazil’s market is still considered as ‘risky’ at a time when the major threat to the global economy are coming from the developed world. The ‘safest’ of the West’s asset, the US Treasury bill, is still a preferred choice - a few days after its first downgrade in history.