Emerging Markets

Argentina gets too cheeky with its creditors

8 Jun 2020

The serial defaulter wants to put its restructuring to a creditor vote, but leave room to decide later which votes count and which don’t. That would require a tweak to a common clause designed to make bond negotiations simpler. Emerging-market borrowers would be worse off for it.

Guest view: Debt crisis will delay global recovery

25 May 2020

The world is facing an emerging market blowup of unprecedented breadth that will damage confidence in the international financial system, former Citibank Chairman William Rhodes and Stuart Mackintosh argue. Easing the blow requires the United States and China to work together.

Debt hero role awaits China at rich price

21 May 2020

Beijing has deferred loan payments from poor countries, but with over $900 bln in IOUs from emerging markets, officials are hesitant to do more. China’s banking opacity deters cooperation. If it wants to seize leadership, it will have to come clean.

Emerging markets will see less index, more Rolodex

13 May 2020

Epic Federal Reserve action has stemmed an unprecedented flood of capital from developing countries. But ongoing virus concerns make it risky to invest by lazily following an index. Sensible fund managers will now need to appreciate the local nuances of the places they buy into.

Virus offers Pakistan grim bargaining opportunity

5 May 2020

Debt payments suck up the largest chunk of its budget. Islamabad’s $8 bln crisis support package is measly, yet will push the fiscal deficit to 10% of GDP. Pakistan needs more than repayment deferral from creditors, especially China. And it’s better positioned to ask than most.

Poor-country central banks will go awry aping Fed

4 May 2020

Rate-setters from Indonesia to Hungary are copying Fed Chair Jay Powell by buying bonds. Others could well follow. That will curb borrowing costs at a time of rising public spending. But these policymakers run bigger inflation and credibility risks than their developed peers.

Argentina overplays hand in bond pain déjà vu

20 Apr 2020

BlackRock and other creditors have come out against the serial defaulter’s plan to restructure some $66 bln in debt. New legal protections should help their cause, and a messy default could attract holdouts. But time is their biggest advantage: Argentina needs money.

India erects low wall against Chinese money

20 Apr 2020

Direct investment from the People’s Republic will now require special approval, potentially slowing technology development. Capital-hungry India has left the door open to buyers from elsewhere, however. Chinese funds will keep flowing in, but only where they’re welcome.

Corona Capital: Oil cheerleading, Mortgaging Ford

13 Apr 2020

Concise views on the pandemic’s corporate and financial fallout: U.S. and Saudi energy ministers agree on pumping up oil, Ford may use an old trick to raise new capital.

Mexico cans Corona plant in unaffordable sideshow

24 Mar 2020

The country’s president held a referendum that nixed Constellation Brands’ massive brewery, as the nation faces a manufacturing pullback, rock-bottom oil prices, and a weak peso. Rigid nationalist, anti-corporate politics can be costly in normal times – let alone in a crisis.

Emerging markets dollar lifeboat leakier than 2008

19 Mar 2020

Capital is heading out of Indonesia, Turkey and other emerging economies faster than in the financial crisis. Like then, the Fed should set up dollar swap lines with some of their central banks, and the IMF should boost reserves. But even these fixes might not stem the torrent.

Investors’ Brazil dream becomes nightmare

13 Mar 2020

The former market darling’s currency has shed over 16% of its value versus the U.S. dollar this year, and its stock market is among the worst-performing in the world. Its trade position is weakening. And neither Brazil's central bank nor its president have good policy options.

IMF’s $44 bln error in Argentina calls for haircut

24 Feb 2020

The international lender now says the serial defaulter’s debt burden – near 90% of GDP – is unsustainable and that private creditors will have to take a hit. It’s right on both counts. But it also fumbled this bailout badly. In such an exceptional case, it should share the pain.

Thai tycoons set for uphill battle over Tesco Asia

6 Feb 2020

The UK grocer could sell its Asian assets for $9 bln. As the Thai economy slows, foreign buyers are steering clear, leaving the country’s most powerful families to duke it out. With antitrust watchdogs alerted, and financing issues aplenty, a smooth checkout looks unlikely.

Tesco leaves Asia with a full cart

9 Dec 2019

Britain's biggest grocer may sell its business in Thailand and Malaysia. Thai peer Central Retail should list at a rich valuation, making it a good time to exit before regional economies cool further. The likes of prior owner CP Group could put $9 bln in Tesco’s pocket.

Mexico slowdown puts president in fiscal bind

25 Nov 2019

Lopez Obrador wants to increase welfare spending without sacrificing budget targets. That’s now unlikely after a recent recession and probable slow growth in 2020. But avoiding a budget deficit could put him at odds with the populism he espouses, and which brought him to power.

Bolivia’s president snared by his own success

11 Nov 2019

Evo Morales stepped aside after weeks of protests over vote-rigging claims. Growing the country’s middle class helped him score three terms. But with democratic norms under threat, that same precarious class may have stopped him from getting a fourth.

Viewsroom: WeWork’s future may lie in China’s past

24 Oct 2019

Beijing-based Kr Space switched from renting out space held on long-term leases to selling services after the shared-office market crashed. Following suit may help WeWork stem losses. Also: climate change and Canada’s election. Plus: the gloomy IMF and unrest in Latin America.

Argentina’s FX rift reflects its two-Macri problem

30 Sep 2019

The offshore peso rate has diverged 15% from the official rate, suggesting markets have lost faith with President Mauricio Macri. Political realities may explain why he promised one thing and delivered another. Future reformers may receive a greater degree of investor skepticism.

Baht’s brawn weakens sick man of Southeast Asia

19 Aug 2019

Thailand’s $500 bln economy expanded at its slowest rate in nearly five years last quarter, hit by cooling exports and tourism. Yet its currency is an outperformer, aggravating both problems. Lower rates and public spending could weaken it, as might investing more funds abroad.