World stocks fall: “Cratering currencies, rising inflation, jumpy investors: A financial panic is again gripping some of the world’s developing economies.
“The sharp sell-off of emerging market currencies, stocks and bonds seems to stand in stark contrast to the United States, where a nearly decade-long bull market continues amid buoyant economic conditions.
“Higher interest rates in the United States and a stronger dollar rebalance the risks and rewards for investors the world over, and act as a kind of financial magnet, pulling them out of riskier investments.”
https://www.nytimes.com/2018/09/11/business/economy/emerging-markets-economy-bust.html
“It’s a losing streak investors haven’t seen since 2002. The benchmark MSCI Asia Pacific Index fell for a tenth consecutive day on Wednesday, extending its recent decline to about 5 per cent and bringing the loss in value to almost US$700 billion this year.”
“…there is a chain of potential contagion that could give markets more of a scare than they’ve felt so far, warns Satyajit Das. The global economy isn’t exactly in the best shape; and as we discovered a decade ago, markets are linked in ways that can surprise investors: “If EM stresses persist, then advanced economies face additional credit tightening, exacerbating the reductions in liquidity underway and potentially transmitting price shocks.””
https://www.bloomberg.com/view/articles/2018-09-11/emerging-markets-could-still-go-pear-shaped
“As the sell-offs in Turkey and Argentina spread to other emerging markets, doubts that developed markets can retain their immunity are getting louder. JPMorgan Chase & Co. says the vulnerability of mature markets to contagion emanating from developing nations hinges on Asia’s economic resilience. At ING Groep NV the risk is that monetary tightening in many emerging economies could eventually crimp growth and have a knock-on impact for advanced economies.”
“The crisis in Argentina and the sharp devaluation of the local currency are putting pressure on businesses that trade with the South American country – Brazilian companies in special. A J.P. Morgan report analyzing quarterly reports from publicly traded companies show Brazilian businesses as the ones most affected by the Argentinian financial crisis.”
https://www1.folha.uol.com.br/internacional/en/business/2018/09/brazilian-companies-include-risk-with-argentina-crisis-in-financial-results.shtml
“Brazilian equities and currencies slumped on Tuesday after an opinion poll on the presidential election showed leftist candidates gaining ground while market-friendly centrists did not. Traders had bet that a market-friendly candidate would emerge from the pack to win in October. A Datafolha opinion poll released Monday night underlined that the window for such a development is rapidly closing.”
“A U.S. official has accused Venezuela’s President Nicolas Maduro of “rapacious corruption” and operating “a kleptocracy” on a rarely seen scale that includes embezzling from the state-owned oil company and stealing from a government program created to feed millions of hungry people.”
https://www.cbc.ca/news/world/us-venezuela-stealing-food-program-hunger-1.4818714
“South Africa’s rand weakened on Tuesday as emerging market currencies lost ground with further deterioration in United States and China trade relations subduing demand for risk assets.”
https://af.reuters.com/article/commoditiesNews/idAFL5N1VY169
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“Stalled high-rises, homeless retirees and “Ponzi schemes”: a promised economic revival [in Turkey] is evaporating.”
https://www.wsj.com/articles/dreams-turn-sour-as-turkeys-building-boom-sags-1536658200
“Pakistan, which is facing a financial crisis and may need a bailout, has added half of its power generating capacity in the past five years with Chinese help but a weak distribution network means companies and households are still bereft of electricity. Prime Minister Imran Khan faced immediate complaints after he was elected premier by lawmakers last month when the nation’s largest city Karachi was hit by an all-night blackout.”
“South Korea’s unemployment rate rose to an eight-year high in August as mandatory minimum wages rose, worsening economic policy frustrations for President Moon Jae-in whose approval rating is now at its lowest since inauguration.”
“Chinese auto sales fell in August for the second successive month, as market saturation and weak consumer confidence combined to slow the world’s biggest car market. Vehicle sales fell 3.8% to 2.1 million last month, the government-backed China Association of Automobile Manufacturers said on Tuesday. That followed a 4% drop in July.”
https://www.wsj.com/articles/china-auto-sales-slump-on-trade-tensions-economic-jitters-1536661981
“Those hoping that U.S.-China trade tensions will disappear when President Donald Trump leaves office should think again, according to economist Tyler Cowen. Those tensions are here to stay and the world must prepare for a new paradigm in global trade, the professor of economics at George Mason University in the United States told the annual CLSA Investors’ Forum in Hong Kong on Monday.”
https://www.cnbc.com/2018/09/11/trade-war-tensions-are-here-to-stay-economist-tyler-cowen-says.html
“The intensifying trade war between China and the United States could “shock” emerging markets that are already in danger, the head of the International Monetary Fund said in an interview published on Tuesday (sept 11). As a result, crises in Turkey and Argentina could spread, IMF managing director Christine Lagarde told the Financial Times.”
Video:
“On the tenth anniversary of the financial crisis, CNBC’s Brian Sullivan reports how [US] corporate debt has crept its way back up to levels seen back then.”
https://www.cnbc.com/video/2018/09/11/is-another-corporate-debt-crisis-lurking.html
