This Week In Emerging Markets

August 1, 2014

By: Darren Viegas

Emerging Markets Stocks Fall as US GDP Stokes Stimulus Concern

Emerging markets equities fell as the US Economy grew much more than anticipated. This has instilled fears in the EM investors that the Federal Reserve will decrease stimulus- which has been the main driver of demand for EM assets.

Brazil’s Real Leads Global Declines on US Fed Tapering Concern

The Brazilian Real led global currency losses as the US economy grew more than anticipated. Like the equities market, the real declined on the speculation the Federal Reserve will keep tapering the stimulus program. The real declined 1.1% to 2.2571 per dollar, and swap rates rose 13 basis points to 11.47%. The real is also falling on the news that Brazil posted an outflow of $4.7 billion in the month ended July 25th.

Emerging Market Stocks Head for Biggest Weekly Drop Since March

Emerging Markets are looking to head lower for the week as disappointing earnings in Asia and the default scare in Argentina reduced investors search for yield in riskier assets. The MSCI index fell 0.9% to 1056.34. Samsung posted its largest two day drop after UBS AG cut its rating. The MICEX index tumbled as the European Union imposed sanctions on Russia.

Real Heads for Weekly Drop As Brazil Refrains From Swap Rollover

The Brazilian real heads for its biggest weekly decline as the central bank has abstained from starting a rollover of foreign exchange swap contracts supporting the real. The real fell 1.3% to 2.2590 per dollar. Swap rates increased 11 basis points, to 11.6%. Brazil posted a primary budget deficit for the second straight month and production fell 1.4%.

 

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