http://www.emergingmarketsmonitor.com Emerging Markets Monitor RSS Feed from Business Monitor International en Copyright 2009, Business Monitor International Ltd Thu, 02 Jul 2009 06:30 GMT Thu, 02 Jul 2009 06:30 GMT AFP RSS Generator Commodity markets have left us somewhat cautious after a series of poor monthly closes for several commodities and macroeconomic developments, which to us suggest that deflationary pressures are still lingering in the global economy. From a technical perspective, the CRB Index had a poor end of June close, and as we mentioned yesterday, could suggest further downside to support around the 237 area and potentially even lower. Similarly, other commodities such as corn and wheat, were hard-hit by a United States Department of Agriculture (USDA) report - indicating record increases in acreage and stocks. These two commodities have posted significant http://www.emergingmarketsmonitor.com/file/79013/Commodities:-Caveat-Emptor.html Wed, 01 Jul 2009 00:00 GMT The purchasing managers' index (PMI) for June has provided another encouraging sign that an economic revival is underway in China, with the official PMI climbing to 53.2 from 53.1 in May. Encouragingly, the new exports sub-component jumped 1.3pp to 51.4, while the employment sub-index rose back above the all-important 50.0 threshold which separates expected expansion from anticipated contraction, as it rose from 49.9 to 50.1. http://www.emergingmarketsmonitor.com/file/79012/Positive-PMI-Numbers-Underscore-Economic-Recovery.html Wed, 01 Jul 2009 00:00 GMT BMI View: We are forecasting that interest rates will be cut by 100bps over the remainder of 2009, likely beginning with a 25-50bps cut in July. The authorities are in dovish mode, and recognise the need to support private investment. http://www.emergingmarketsmonitor.com/file/79010/Interest-Rate-Cuts-Ahead:-Four-Reasons-Why.html Tue, 30 Jun 2009 00:00 GMT Having gained some momentum over the course of February and March, the Polish zloty now appears to have run out of steam, trading within a PLN4.6000 - 4.2000/EUR band since the beginning of April. The unit is currently testing key resistance at PLN4.4500/EUR, a firm breach of which could set up further gains towards the stronger end of its horizontal trend channel at PLN4.2000/EUR. However, we stop short of calling for additional gains beyond this point. Moreover, we caution that while volatility across global financial markets has appeared to have died down somewhat as risk appetite has improved, CEE crisis risks in the form of banking sector ructions and EU peg devaluations could yet send the zloty reeling in the short term. http://www.emergingmarketsmonitor.com/file/79011/Dissipating-Volatility-Supportive-Of-Neutral-Zloty-View.html Wed, 01 Jul 2009 00:00 GMT The short-term outlook for commodities has strengthened since last week, when the deterioration of the technical picture prompted us to adopt a bearish bias with regard to the complex. However, a number of commodities have since posted impressive gains, while others appear set to renew upward momentum following short-term corrections. An improved technical picture has been accompanied by a weakening of the US dollar and a general firming of global equity markets in recent days. The CRB index has bounced off support from around 245 to 254 at one point today and a weekly close above support should be conducive http://www.emergingmarketsmonitor.com/file/78969/Commodities:-Firming-Up-Slightly.html Tue, 30 Jun 2009 00:00 GMT In the end, Argentina's mid-term election results proved worse for President Cristina Fernández than even we had previously anticipated. Not only did her ruling Frente para Victoria bloc suffer a major defeat at the ballot box, losing majorities in both houses, but her husband (and former president) Néstor Kirchner also suffered an embarrassing defeat in Buenos Aires province. In yesterday's DFA, we discussed the political ramifications of the outcome http://www.emergingmarketsmonitor.com/file/78968/Mid-Term-Elections:-Asset-Implications.html Tue, 30 Jun 2009 00:00 GMT Front-month Brent crude climbed 5.4% in June, but latterly broke below trendline support at US$67.70/bbl. While prices have rebounded somewhat, the weaker technical picture has left us cautious with regard to oil in the short term. This is particularly the case given the tentative current state of global equity markets and the ongoing mixed fundamental picture. We have downwardly revised our average 2009 Brent price forecast to US$53.00/bbl from US$54.00/bbl previously. However, this is solely down to modelling technicalities and we remain bullish oil over the medium term. Indeed, in the event of a retracement, Brent will find robust trendline http://www.emergingmarketsmonitor.com/file/78934/Monthly-Oil-Metals-Update.html Mon, 29 Jun 2009 00:00 GMT Front-month cocoa surged higher at the start of June, but later weakened markedly to end the month down 5.3%. Accordingly, the technical picture looks weak and potentially poses a downside risk to our 2009 average price forecast of GBP1,800/tonne. That said, we expect that ongoing supply-side problems in Ghana, Indonesia and the Cote D'Ivoire will depress global production by 7.7% y-o-y and lend fundamental support to prices in the coming months. Indeed, while we see global cocoa consumption weakening this year, we anticipate a global deficit of 120,000 tonnes. While this is smaller than the 130,000 tonne deficit we http://www.emergingmarketsmonitor.com/file/78933/Monthly-Softs-Update.html Mon, 29 Jun 2009 00:00 GMT BMI View: North Korea's economy grew by an impressive 3.7% in 2008, due to 'one-off' factors, but this success is unlikely to be repeated in 2009, due to the severity of the global recession and the poorer geopolitical environment. http://www.emergingmarketsmonitor.com/file/78932/Economy-Robust-In-2008-But-2009-Will-Be-Very-Tough.html Mon, 29 Jun 2009 00:00 GMT Egypt's monetary easing cycle is likely drawing to a close, and we are leaving our forecasts on hold following the 50bps cut in June. We now see the lending and deposit rates ending 2009 at their current levels of 10.0% and 8.5% respectively (retaining the 150bps differential, which was narrowed in May). http://www.emergingmarketsmonitor.com/file/78887/No-More-Rate-Cuts--For-Now.html Fri, 26 Jun 2009 00:00 GMT Regular readers of service will know that our commodity view has evolved significantly since October 2008. At the time, we had taken a very defensive position with regard to commodities and suggested that grains and softs would outperform industrial metals and energy stocks. This view played out as the group suffered less downside price action as demonstrated by the chart (LHS). Then in early March, when the market began to turn, we suggested that that an important change in market dynamics was underway and selectivity was key. We argued that commodities with supply-side issues, and still-strong demand would likely outperform, http://www.emergingmarketsmonitor.com/file/78888/Commodities:-Strong-H109-But-What-About-H209.html Fri, 26 Jun 2009 00:00 GMT While the authorities have repeatedly reassured investors that there is sufficient domestic liquidity to absorb the government's planned THB800bn (US$23.5bn) worth of borrowing to finance its THB1.43trn fiscal stimulus programme, the jury is still out on the degree to which this can be achieved without pushing yields higher. So far the market appears to have responded with relative indifference to the bumper issuance, with bonds having bounced back in recent weeks (see chart below). http://www.emergingmarketsmonitor.com/file/78889/Savings-Bonds-A-Key-Litmus-Test.html Fri, 26 Jun 2009 00:00 GMT Singapore has already begun to reduce its export dependence on the Western developed countries. However, this diversification is not sufficient at this stage to mitigate the current downturn and export growth will remain weak over the coming year. http://www.emergingmarketsmonitor.com/file/78886/Shifting-Export-Tides-Are-Just-Beginning.html Fri, 26 Jun 2009 00:00 GMT The rupee faces four-month trendline support at INR48.70/US$, a break of which could take it back towards INR50.00/US$. The stock market rally following general elections in April-May is faltering, and a drop in the Sensex below four-month trendline support at 14,300 could serve as the trigger for further rupee weakness. Global risk appetite will remain a key factor for the rupee, as it will determine the volume of capital inflows. Should risk appetite improve, major resistance for the rupee exists at INR46.50/US$. http://www.emergingmarketsmonitor.com/file/78885/Rupee:-Downside-Risks-In-Play-For-Now.html Fri, 26 Jun 2009 00:00 GMT The retracement in global equities and commodities - including copper - has certainly clouded the outlook for the Zambian kwacha and undermined our (cautiously) bullish short-term view. Struggling to overcome strong resistance at ZMK4,900/US$, the unit has since turned the other way and broke through five-week support ZMK5,050/US$ on June 17. Trading at ZMK5,240/US$ at one point on June 25, the unit has lost 6.4% since its last attempt at resistance on June 16. This retracement has seen the currency give up over half its gains since smashing through three-month resistance of ZMK5,450/US$ in early May following the release of http://www.emergingmarketsmonitor.com/file/78856/Kwacha-Retracing.html Thu, 25 Jun 2009 00:00 GMT