In many ways the story of the last month has been the weakness of emerging markets, with Turkey and Argentina being in the spotlight due to the idiosyncratic responses of their governments to pressures on currencies, but with a more general theme also playing out as higher US interest rates, a stronger dollar and firmer oil prices threaten capital flows to those countries with large deficits, high inflation and reliance on foreign funding.
After outperforming global equity markets for the last two years, emerging market equities have underperformed since the start of 2018. The MSCI EM index has dropped -1.9 per cent year-to-date (ytd) compared to a +0.4 per cent ytd gain in the MSCI World index, and since the start of second quarter of 2018, the MSCI EM index has dropped -2.9 per cent compared to a gain of +2.1 per cent in the MSCI World index.
A recent report by the ratings agency Fitch highlighted that EM debt securities have ballooned to $19.3 trillion from $5tn a decade ago, with China apparently accounting for more than half of this increase, but with the Ukraine, Turkey and Argentina being cited as "the most vulnerable".
Approximately two-thirds of this EM debt is also dollar denominated making it particularly problematic at a time of dollar strength and rising US rates.
Argentina raised interest rates four times in less than a month to 40 per cent as the government tried to halt currency depreciation, contributing to a 56 basis point (bps) increase in 10-year Argentine government bond yields to 7.29 per cent.
In Turkey, the lira had been getting close to a rate of 5.00 to the US dollar on May 23 before the central bank intervened and implemented an emergency 300bps hike to its late liquidity window– its monetary policy tool of choice – taking it to 16.50 per cent.
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Read more:
[ Oil set for best weekly winning streak since 2011 after hitting the $80 mark ]
[ IMF's Christine Lagarde: Turkey central bank must stay independent ]
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This followed remarks from President Recep Tayyip Erdogan that should he win the snap election he called in April next month, he would assume greater control over monetary policy. Having previously declared himself as an enemy of high rates, believing that they in fact fuel inflation, sentiment towards the Turkish lira recovered a little following the rate hike.
Some further more placatory statements from President Erdogan also helped, pledging that Turkey had the means to stabilise the currency in the short term. He also talked about how new measures to reduce inflation and narrow the current account deficit would be adopted after the June 24 elections, which he is likely to win. Much will now depend on what those new measures turn out to be.
Unnervingly, the market pressure is not only confined to emerging markets, as Italy and Spain are increasingly coming under scrutiny due to largely domestic political reasons, but also against a backdrop of weak macro fundamentals and historic structural problems. The new Italian coalition government is pushing for debt relief on its national debt which is 130 per cent of gross domestic product, while at the same time promising to increase fiscal spending that could see the country's debt burden rise to closer to 160 per cent of GDP.
At the same time the formation of that government is also being threatened by its choices for key cabinet posts, with its nomination for finance minister an avowed Euro-sceptic.
Spain’s government is also facing a risk of collapse, with the main opposition party calling for a vote of no confidence in the minority rule of Mariano Rajoy, whose centre-right Popular party has been plagued by a campaign finance scandal. Spain’s fundamentals are firmer than Italy’s, however, with nominal GDP growth stronger and with its debt burden under greater control following cuts to it fiscal deficit in recent years.
None of Spain’s main political parties are Euro-sceptic either, but the situation does remind about how sensitive markets can be to political risks, particularly in countries with such uneven track records of economic management, and at a time when fragility in one of its key eurozone partners is also being exposed.
The euro fell to its lowest level against the dollar in six months last Friday, below 1.17, with demand for "core" government debt in the US, UK and Germany being preferred over peripheral debt.
However, with global events, over trade tariffs and geopolitical issues again starting to cast a shadow over some of these evolving regional and emerging market themes, it may not be long before they are amplified by risks of a much greater international nature and significance.
Tim Fox is chief economist and head of research at Emirates NBD
Fifa World Cup Qatar 2022
First match: November 20
Final 16 round: December 3 to 6
Quarter-finals: December 9 and 10
Semi-finals: December 13 and 14
Final: December 18
The results of the first round are as follows:
Qais Saied (Independent): 18.4 per cent
Nabil Karoui (Qalb Tounes): 15.58 per cent
Abdelfattah Mourou (Ennahdha party): 12.88 per cent
Abdelkarim Zbidi (two-time defence minister backed by Nidaa Tounes party): 10.7 per cent
Youssef Chahed (former prime minister, leader of Long Live Tunisia): 7.3 per cent
The specs
Engine: 3.0 twin-turbo inline six-cylinder
Transmission: eight-speed
Power: 503hp
Torque: 600Nm
Price: from Dh400,000 (estimate)
On sale: now
Poacher
Director: Richie Mehta
Starring: Nimisha Sajayan, Roshan Mathew, Dibyendu Bhattacharya
Rating: 3/5
Dengue fever symptoms
- High fever
- Intense pain behind your eyes
- Severe headache
- Muscle and joint pains
- Nausea
- Vomiting
- Swollen glands
- Rash
If symptoms occur, they usually last for two-seven days
Company Profile
Company name: myZoi
Started: 2021
Founders: Syed Ali, Christian Buchholz, Shanawaz Rouf, Arsalan Siddiqui, Nabid Hassan
Based: UAE
Number of staff: 37
Investment: Initial undisclosed funding from SC Ventures; second round of funding totalling $14 million from a consortium of SBI, a Japanese VC firm, and SC Venture
Citizenship-by-investment programmes
United Kingdom
The UK offers three programmes for residency. The UK Overseas Business Representative Visa lets you open an overseas branch office of your existing company in the country at no extra investment. For the UK Tier 1 Innovator Visa, you are required to invest £50,000 (Dh238,000) into a business. You can also get a UK Tier 1 Investor Visa if you invest £2 million, £5m or £10m (the higher the investment, the sooner you obtain your permanent residency).
All UK residency visas get approved in 90 to 120 days and are valid for 3 years. After 3 years, the applicant can apply for extension of another 2 years. Once they have lived in the UK for a minimum of 6 months every year, they are eligible to apply for permanent residency (called Indefinite Leave to Remain). After one year of ILR, the applicant can apply for UK passport.
The Caribbean
Depending on the country, the investment amount starts from $100,000 (Dh367,250) and can go up to $400,000 in real estate. From the date of purchase, it will take between four to five months to receive a passport.
Portugal
The investment amount ranges from €350,000 to €500,000 (Dh1.5m to Dh2.16m) in real estate. From the date of purchase, it will take a maximum of six months to receive a Golden Visa. Applicants can apply for permanent residency after five years and Portuguese citizenship after six years.
“Among European countries with residency programmes, Portugal has been the most popular because it offers the most cost-effective programme to eventually acquire citizenship of the European Union without ever residing in Portugal,” states Veronica Cotdemiey of Citizenship Invest.
Greece
The real estate investment threshold to acquire residency for Greece is €250,000, making it the cheapest real estate residency visa scheme in Europe. You can apply for residency in four months and citizenship after seven years.
Spain
The real estate investment threshold to acquire residency for Spain is €500,000. You can apply for permanent residency after five years and citizenship after 10 years. It is not necessary to live in Spain to retain and renew the residency visa permit.
Cyprus
Cyprus offers the quickest route to citizenship of a European country in only six months. An investment of €2m in real estate is required, making it the highest priced programme in Europe.
Malta
The Malta citizenship by investment programme is lengthy and investors are required to contribute sums as donations to the Maltese government. The applicant must either contribute at least €650,000 to the National Development & Social Fund. Spouses and children are required to contribute €25,000; unmarried children between 18 and 25 and dependent parents must contribute €50,000 each.
The second step is to make an investment in property of at least €350,000 or enter a property rental contract for at least €16,000 per annum for five years. The third step is to invest at least €150,000 in bonds or shares approved by the Maltese government to be kept for at least five years.
Candidates must commit to a minimum physical presence in Malta before citizenship is granted. While you get residency in two months, you can apply for citizenship after a year.
Egypt
A one-year residency permit can be bought if you purchase property in Egypt worth $100,000. A three-year residency is available for those who invest $200,000 in property, and five years for those who purchase property worth $400,000.
Source: Citizenship Invest and Aqua Properties
Under 19 World Cup
Group A: India, Japan, New Zealand, Sri Lanka
Group B: Australia, England, Nigeria, West Indies
Group C: Bangladesh, Pakistan, Scotland, Zimbabwe
Group D: Afghanistan, Canada, South Africa, UAE
UAE fixtures
Saturday, January 18, v Canada
Wednesday, January 22, v Afghanistan
Saturday, January 25, v South Africa
Company Profile
Company name: Namara
Started: June 2022
Founder: Mohammed Alnamara
Based: Dubai
Sector: Microfinance
Current number of staff: 16
Investment stage: Series A
Investors: Family offices
More from Rashmee Roshan Lall
EGYPT SQUAD
Goalkeepers: Ahmed El Shennawy, Mohamed El Shennawy, Mohamed Abou-Gabal, Mahmoud Abdel Rehem "Genesh"
Defenders: Ahmed Elmohamady, Ahmed Hegazi, Omar Gaber, Ali Gazal, Ayman Ahsraf, Mahmoud Hamdy, Baher Elmohamady, Ahmed Ayman Mansour, Mahmoud Alaa, Ahmed Abou-Elfotouh
Midfielders: Walid Soliman, Abdallah El Said, Mohamed Elneny, Tarek Hamed, Mahmoud “Trezeguet” Hassan, Amr Warda, Nabil Emad
Forwards: Ahmed Ali, Mohamed Salah, Marwan Mohsen, Ahmed "Kouka" Hassan.
Shubh Mangal Saavdhan
Directed by: RS Prasanna
Starring: Ayushmann Khurrana, Bhumi Pednekar
Company Profile
Company name: Cargoz
Date started: January 2022
Founders: Premlal Pullisserry and Lijo Antony
Based: Dubai
Number of staff: 30
Investment stage: Seed
Herc's Adventures
Developer: Big Ape Productions
Publisher: LucasArts
Console: PlayStation 1 & 5, Sega Saturn
Rating: 4/5
5 of the most-popular Airbnb locations in Dubai
Bobby Grudziecki, chief operating officer of Frank Porter, identifies the five most popular areas in Dubai for those looking to make the most out of their properties and the rates owners can secure:
• Dubai Marina
The Marina and Jumeirah Beach Residence are popular locations, says Mr Grudziecki, due to their closeness to the beach, restaurants and hotels.
Frank Porter’s average Airbnb rent:
One bedroom: Dh482 to Dh739
Two bedroom: Dh627 to Dh960
Three bedroom: Dh721 to Dh1,104
• Downtown
Within walking distance of the Dubai Mall, Burj Khalifa and the famous fountains, this location combines business and leisure. “Sure it’s for tourists,” says Mr Grudziecki. “Though Downtown [still caters to business people] because it’s close to Dubai International Financial Centre."
Frank Porter’s average Airbnb rent:
One bedroom: Dh497 to Dh772
Two bedroom: Dh646 to Dh1,003
Three bedroom: Dh743 to Dh1,154
• City Walk
The rising star of the Dubai property market, this area is lined with pristine sidewalks, boutiques and cafes and close to the new entertainment venue Coca Cola Arena. “Downtown and Marina are pretty much the same prices,” Mr Grudziecki says, “but City Walk is higher.”
Frank Porter’s average Airbnb rent:
One bedroom: Dh524 to Dh809
Two bedroom: Dh682 to Dh1,052
Three bedroom: Dh784 to Dh1,210
• Jumeirah Lake Towers
Dubai Marina’s little brother JLT resides on the other side of Sheikh Zayed road but is still close enough to beachside outlets and attractions. The big selling point for Airbnb renters, however, is that “it’s cheaper than Dubai Marina”, Mr Grudziecki says.
Frank Porter’s average Airbnb rent:
One bedroom: Dh422 to Dh629
Two bedroom: Dh549 to Dh818
Three bedroom: Dh631 to Dh941
• Palm Jumeirah
Palm Jumeirah's proximity to luxury resorts is attractive, especially for big families, says Mr Grudziecki, as Airbnb renters can secure competitive rates on one of the world’s most famous tourist destinations.
Frank Porter’s average Airbnb rent:
One bedroom: Dh503 to Dh770
Two bedroom: Dh654 to Dh1,002
Three bedroom: Dh752 to Dh1,152
Abu Dhabi GP schedule
Friday: First practice - 1pm; Second practice - 5pm
Saturday: Final practice - 2pm; Qualifying - 5pm
Sunday: Etihad Airways Abu Dhabi Grand Prix (55 laps) - 5.10pm
FIGHT CARD
Anthony Joshua v Otto Wallin, 12 rounds, heavyweight
Deontay Wilder v Joseph Parker, 12 rounds, heavyweight
Dmitry Bivol v Lyndon Arthur, 12 rounds, light heavyweight
Daniel Dubois v Jarrell Miller, 12 rounds, heavyweight
Filip Hrgovic v Mark de Mori, 12 rounds, heavyweight
Arslanbek Makhmudov v Agit Kabayel, 12 rounds, heavyweight
Frank Sanchez v Junior Fa, 12 rounds, heavyweight
Jai Opetaia v Ellis Zorro, 12 rounds, cruiserweight
FULL RESULTS
Middleweight
Eslam Syaha (EGY) bt Robin Roos (SWE)
Welterweight
Alex da Silva (BRA) bt Bagyash Zharmamatov (KGZ)
Murodov Samandar (TJK) bt Lucas Sampaio (BRA)
Shakhban Alkhasov (RUS) bt Salamat Orozakunov (KGZ)
Khotamjon Boynazarov (UZB) bt Mikail Bayram (FRA)
Bantamweight
Jieleyisi Baergeng (CHN) bt Xavier Alaoui (CAN)
Flyweight
Rashid Vagabov (RUS) bt Lun Qui (CHN)
Yamato Fujita (JPN) bt Furkatbek Yokubov (UZB)
Aaron Aby (WLS) bt Joevincent So (PHI)
Catchweight 176lb
Mark Hulm (RSA) bt Erkin Darmenov (KAZ)
Catchweight 160lb
Rustam Serbiev (BEL) bt Anar Huseyinov (AZE)
Catchweight 150lb
Islam Reda (EGY) bt Ernie Braca (PHI)
Flyweight (women)
Baktygul Kurmanbekova (KGZ) bt Maria Eugenia Zbrun (ARG)
POWERWASH SIMULATOR
Developer: FuturLab
Publisher: Square Enix Collective
Console: Nintendo Switch, PlayStation 4 & 5, Xbox Series X/S and PC
Rating: 4/5
Company Profile
Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8
Small Things Like These
Director: Tim Mielants
Cast: Cillian Murphy, Emily Watson, Eileen Walsh
Rating: 4/5
Sly Cooper and the Thievius Raccoonus
Developer: Sucker Punch Productions
Publisher: Sony Computer Entertainment
Console: PlayStation 2 to 5
Rating: 5/5
SPECS
Engine: 4-litre V8 twin-turbo
Power: 630hp
Torque: 850Nm
Transmission: 8-speed Tiptronic automatic
Price: From Dh599,000
On sale: Now
Specs
Power train: 4.0-litre twin-turbo V8 and synchronous electric motor
Max power: 800hp
Max torque: 950Nm
Transmission: Eight-speed auto
Battery: 25.7kWh lithium-ion
0-100km/h: 3.4sec
0-200km/h: 11.4sec
Top speed: 312km/h
Max electric-only range: 60km (claimed)
On sale: Q3
Price: From Dh1.2m (estimate)