Article / 16 August 2016 at 11:26 GMT

Daily Shot: EM assets take to the skies Team / Saxo Bank
  • Mexican, Russian, Brazilian equities spike higher
  • Russian industrial output stalls in July
  • Indonesian exports (and imports) fall sharply

By Walter Kurtz*

We begin with emerging economies where, driven by fund inflows, several equity markets are heating up.

1. The Russian stock market hit a new record (in RUB).

Russian markets
2. Mexican and Brazilian stock markets have moved sharply higher as well. 

Mexico and Brazil Mexico and Brazil
3. Even the Shanghai Composite jumped on official talk (according to media reports) of the Stock Connect launch (which is not news).

4. Here is the MSCI Emerging Markets (equities) index compared to the MSCI World index.  

MSCI Emerging Markets
5. Debt fund flows continue driving emerging Asia yields lower. Here are China's and Malaysia's 10-year government bond yields.
Chinese bond yields Malaysia
 6. In fact, year-to-date, emerging markets bond returns are more than double that of the US HY bonds. 

EM bonds
Inflows into emerging market debt can be seen in the shares outstanding of this large EM debt ETF. 

7. The JP Morgan Emerging Market Currency Index is also rising, though remains far below the averages over the past several years.

JP Morgan index
8. In EM economic reports, Russia's industrial output growth stalls in July. The "recovery" remains highly uneven. 
Russian output
 9. Indonesia's exports (and imports) fell sharply - far worse than expected. The stock market dropped in response but is recovering this morning.
Indonesia Jakarta exchange
 — Edited by Michael McKenna

* Walter Kurtz is an alias

** This is an abridged version of the Daily Shot. To subscribe to the full version, link to the Daily Shot and select the appropriate command. E-mail addresses are never shared with anyone.


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