While I started off writing that China was the cusp of an economic, and potentially political, crises over 2 years ago, culminating in The Emperor Wears No Clothes in August of last year, the risks inherent in many other emerging markets was not apparent until earlier this year. Many other countries such as India, Brazil, Turkey, Indonesia, as well as developed markets Australia and Canada had been engineering their own credit bubbles. Since markets have sold off since August, many others are now waking up to the risks in Emerging Markets.
“Societe Generale analysts have seen “moves over the past 24 hours or so that suggest that [emerging] markets are switching to panic mode.” They singled out out volatile markets in Turkey, Hungary, Poland and Indonesia. Benoit Anne, head of emerging markets strategy at Societe Generale, said: “We have elected to maintain a negative bias ahead of the EU meeting.”
“According to a report by Deutsche Bank published yesterday: “Fifty four percent of EM Industrial companies will see a decline in real earnings this year. By our analysis, emerging markets companies are investing too much, diluting cash returns and resulting in poor real earnings growth.”
“The difficulty is that global equities would not be able to withstand both a European recession and an emerging market slowdown simultaneously.”
In a separate note, Societe Generale star strategist Albert Edwards called the likelihood of China escaping the downturn a “pyramid of piffle”.
He said: “Investors remain complacent in the ability of Chinese policy makers to soft-land the economy in this downturn.”
Source : Efinancialnews
Popularity: 4% [?]
[...] Markets are waking up to the risk of emerging markets. (HistorySquared) [...]
[...] $$ : Investors Waking Up to Emerging Market Riskshttp://historysquared.com/2011/10/22/investors-waking-up-to-emerging-market-risks/ [...]
[...] Investors Waking Up to Emerging Market Risks [...]