Forget BRICs & PIIGS; Meet The Fragile 5 Emerging Markets

January 12, 2014 Leave a comment

Forget BRICs & PIIGS; Meet The Fragile 5 Emerging Markets

Tyler Durden on 01/09/2014 20:03 -0500

20140109_saxo

Despite an apparent belief among the US mainstream media that ‘taper’ is priced in, Saxo Capital Markets warns that Emerging Market countries with large current account deficits like Brazil, India, South Africa, Indonesia, and Turkey face increasing problems. As the following chart shows (and highlghted most recently by Brazil’s highest FX outflows since 2002!) could see their currencies weaken even further if the Fed’s taper plans result in a deterioration of global risk appetite. Think it will be different this time? Think again – Brazil just saw its largest outflows since 2002!!!Via WSJ,

Dollars flowed out of Brazil in 2013 at their largest volume in more than a decade amid growing investor risk aversion and shifting capital movements around the globe.

The country’s central bank Wednesday reported net dollar outflows of $12.3 billion, compared with net inflows of $16.8 billion the previous year, and the largest outflows on record since 2002. The outflows were also the country’s first reported since 2008, when net dollar outflows totaled $983 million.

The central bank reported the country posted $8.8 billion in net dollar outflows in December alone.

The net currency outflows in 2013 were led mainly by investment outflows, which reached $23.4 billion. That was down from $8.4 billion in net investment inflows the previous year.

“Every bit of good economic news for the U.S. has been problematic for the rest of the world,” said Mr. Galhardo. “It’s hard to see good news on the horizon that will alleviate the pressure on the real in the short term.”

The dollar outflow trend has been compounded, meanwhile, by growing scrutiny of Brazil’s fiscal health and heightened investor risk aversion.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment