Customers change money at a currency exchange office in Istanbul, Turkey. The country is braced for more turbulence as Turks return to work from a holiday. Photo: Reuters
Customers change money at a currency exchange office in Istanbul, Turkey. The country is braced for more turbulence as Turks return to work from a holiday. Photo: Reuters

Investors continue to flee emerging markets



Last week’s gains may turn into yet another short-lived reprieve as Turks return to work after a long holiday and anxiety over elections in Brazil grows.

The trade skirmish between the US and China may get uglier. And despite the “manifest value” in long-end South African bonds and the rand, investors are bracing for a deterioration in relations between South Africa and the US after President Donald Trump leaped into the land debate, according to Goldman Sachs Group. The US announced on Friday details of limited new sanctions against Russia as the countries exchanged warnings about a possible chemical attack in Syria.

“Fragile currencies including the Brazilian real, Turkish lira and Russian ruble are likely to stay under pressure, dissuading US investors from diversifying their portfolios into higher-yielding emerging markets,” says Mansoor Mohi-uddin, the head of foreign-exchange strategy at NatWest Markets in Singapore. “The medium-term outlook over the next few months remains bullish for the dollar.”

Meanwhile, the People’s Bank of China announced on Friday that banks would resume using the “counter-cyclical” factor when calculating the yuan’s daily reference rate, suggesting authorities are not seeking to stimulate the economy with a weaker yuan. On the same day, Federal Reserve chairman Jerome Powell said the strength of the economy justifies gradually raising rates.

Options traders were last week the most bearish on the Turkish lira, South African rand, Russian ruble and Brazilian real in emerging markets, according to one-month risk reversals - even as developing-nation currencies gained. A Bloomberg currency index that measures carry-trade returns from eight emerging markets, funded by short positions in the dollar, has slumped 4.9 per cent since end-July, set for its biggest monthly drop since November 2016.

Investors continue to flee emerging-markets, according to EPFR Global data with redemptions from bond funds climbing to an eight-week high, while money flowed out of equity funds for the 13th time in the past 14 weeks. South African bond investments posted their biggest outflow on record and investors pulled more than $200 million from Brazilian equity funds for a second week on expectation that the winner in the October presidential election “will not be an economic reformer”.

Here is what else investors should watch out for in emerging markets:

Brazil in campaign mode

Brazil’s most uncertain election since its return to democracy comes into sharper focus for investors this week as presidential candidates start running advertisements on television and radio. Some observers worry that support will be slow to coalesce around the market-friendly potential candidate Geraldo Alckmin, even though he has the majority of advertising time due to alliances with centrist swing parties.

The election outlook helped send the real past 4 per dollar for the first time in two-and-a-half years last week, and yields on 10-year dollar bonds climbed 30 basis points to 6 per cent. The benchmark Ibovespa stock index is among the world’s worst performers this year when measured in dollars.

In another complication, ex-president Luiz Inacio Lula Da Silva may get a decision on whether he’s a legitimate candidate, fostering chances for a return to power by his Workers’ Party. Recent polls show Mr Lula Da Silva’s support has increased even though he’s imprisoned for corruption

Investors will also watch Brazil’s second-quarter growth figures. The numbers are expected to show little or no improvement.

_________

Read more:

Are emerging markets ready for a crisis?

Is the world ready for a Chinese stock market crash?

Turkey crisis puts other emerging nations and investors at risk

_________

Turkey tantrum

Traders should brace for more turbulence as Turks return to work, unless the nation’s policy makers adopt a more market-friendly approach, strategists say. Turkey publishes economic confidence statistics, which will be closely watched for signs of any impact on the economy from the lira crisis.

Trade war

Markets will continue to monitor the ongoing tariff hearing on the additional $200 billion of Chinese goods that may be subject to US tariffs. The trade war between the the world’s two largest economies could escalate after their governments failed to make progress in two days of talks last week.

Tensions from Syria to North Korea

The US and Russia exchanged warnings about a possible chemical attack in Syria and a Western military intervention in response, on the eve of what may be one of the most decisive campaigns in the Middle Eastern country’s civil war.

Mr Trump’s surprise about-face on his top diplomat’s trip to North Korea - just a day after it was announced - reinforced a sense of drift in the administration’s strategy since the president proclaimed a June summit with Kim Jong Un an historic success.

Return to Nafta

While speculation of a handshake agreement has boosted Mexican assets, economy minister Ildefonso Guajardo sought to temper expectations, saying the two countries have yet to solve major issues. Mr Guajardo also said that Mexico will consider negotiations complete until Canada - which has so far been excluded from talks - agrees to a deal.

The peso, the best-performing major currency this year, remains vulnerable to Nafta news. It fell after a report that President-elect Andres Manuel Lopez Obrador’s stance on oil sectors was a key hurdle for a US-Mexico agreement. The peso quickly rebounded as analysts concluded the report was not enough to shake their outlook for the currency.

________

Read more:

Should investors turn their attention to Latin America once again?

Which currency will come out on top in 2018?

Trump comments sink dollar with euro breaking 1.15

________

Bank of Korea’s tough call

Policy makers at the Bank of Korea face a tough call on August 31 whether to raise the policy rate after an unexpected increase in the nation’s unemployment rate in July. The central bank left its key interest rate unchanged at 1.5 per cent last month, but one dissenter voted for a hike, which fueled speculation that an increase could come as soon as the next policy decision. The won, along with the Thai baht, are the only Asian emerging-market currencies to advance in the past month.

The Bok will likely remain accommodative for the rest of the year amid escalating trade friction between the US and China and as inflation remains below target, according to an August 23 note from ING Groep NV.

Peru spending

Peru’s cabinet is set to approve the 2019 budget early. Investors will weigh spending priorities as laid out in the document, which is also expected to include funding for a major reconstruction programme for areas damaged by last year’s floods.

The Peruvian sol had its best week since May and is down the least among Latin American currencies so far this month.

Trade tussle’s effect on China

China’s manufacturing and non-manufacturing indexes for August, to be released on Friday, will reflect the first full month impact of the US-China trade fight, according to a note from ING.

Meanwhile, India is due to report its GDP data for the second quarter on Friday - the same day that Thailand will unveil data on trade balances as well as current account and balance of payments.

South Korea will release its trade data on Saturday while Nigeria will announce its second quarter GDP figures on Monday, which will give an indication of how quickly the Opec member is recovering after being battered by the 2014 oil-price crash. The country’s head of statistics, Yemi Kale, said in an interview with local TV earlier this month that the numbers were looking “quite flat” to the first quarter, when the economy grew an annualised 1.95 per cent.

South Africa will release its credit growth and budget balance data on Thursday, and trade balance figures the next day. Goldman said it is focused on whether the nation’s growth recovery remains underway and if upcoming data reverse the unexpected slowdown in activity and deterioration in its external balance from the first quarter; the firm maintains its three-month forecast for the rand at 13.50 per dollar.

Cryopreservation: A timeline
  1. Keyhole surgery under general anaesthetic
  2. Ovarian tissue surgically removed
  3. Tissue processed in a high-tech facility
  4. Tissue re-implanted at a time of the patient’s choosing
  5. Full hormone production regained within 4-6 months
COMPANY%20PROFILE%20
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Top 10 most polluted cities
  1. Bhiwadi, India
  2. Ghaziabad, India
  3. Hotan, China
  4. Delhi, India
  5. Jaunpur, India
  6. Faisalabad, Pakistan
  7. Noida, India
  8. Bahawalpur, Pakistan
  9. Peshawar, Pakistan
  10. Bagpat, India
Guide to intelligent investing
Investing success often hinges on discipline and perspective. As markets fluctuate, remember these guiding principles:
  • Stay invested: Time in the market, not timing the market, is critical to long-term gains.
  • Rational thinking: Breathe and avoid emotional decision-making; let logic and planning guide your actions.
  • Strategic patience: Understand why you’re investing and allow time for your strategies to unfold.
 
 
German intelligence warnings
  • 2002: "Hezbollah supporters feared becoming a target of security services because of the effects of [9/11] ... discussions on Hezbollah policy moved from mosques into smaller circles in private homes." Supporters in Germany: 800
  • 2013: "Financial and logistical support from Germany for Hezbollah in Lebanon supports the armed struggle against Israel ... Hezbollah supporters in Germany hold back from actions that would gain publicity." Supporters in Germany: 950
  • 2023: "It must be reckoned with that Hezbollah will continue to plan terrorist actions outside the Middle East against Israel or Israeli interests." Supporters in Germany: 1,250 

Source: Federal Office for the Protection of the Constitution

COMPANY PROFILE
Name: ARDH Collective
Based: Dubai
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Sector: Sustainability
Total funding: Self funded
Number of employees: 4
Results:

5pm: Handicap (PA) | Dh80,000 | 1,600 metres

Winner: Dasan Da, Saeed Al Mazrooei (jockey), Helal Al Alawi (trainer)

5.30pm: Maiden (PA) | Dh80,000 | 1,600m

Winner: AF Saabah, Tadhg O’Shea, Ernst Oertel

6pm: Handicap (PA) | Dh80,000 | 1,600m

Winner: Mukaram, Pat Cosgrave, Eric Lemartinel

6.30pm: Handicap (PA) | Dh80,000 | 2,200m

Winner: MH Tawag, Richard Mullen, Elise Jeanne

7pm: Wathba Stallions Cup Handicap (PA) | Dh70,000 | 1,400m

Winner: RB Inferno, Fabrice Veron, Ismail Mohammed

7.30pm: Handicap (TB) | Dh100,000 | 1,600m

Winner: Juthoor, Jim Crowley, Erwan Charpy

2024%20Dubai%20Marathon%20Results
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New schools in Dubai
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Pakistan World Cup squad

Sarfraz Ahmed (c), Fakhar Zaman, Imam-ul-Haq, Abid Ali, Babar Azam, Haris Sohail, Shoaib Malik, Mohammad Hafeez(subject to fitness), Imad Wasim, Shadab Khan, Hasan Ali, Faheem Ashraf, Junaid Khan, Shaheen Shah Afridi, Mohammad Hasnain      

Two additions for England ODIs: Mohammad Amir and Asif Ali

COMPANY%20PROFILE
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The%20specs
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MO
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Hotel Data Cloud profile

Date started: June 2016
Founders: Gregor Amon and Kevin Czok
Based: Dubai
Sector: Travel Tech
Size: 10 employees
Funding: $350,000 (Dh1.3 million)
Investors: five angel investors (undisclosed except for Amar Shubar)

COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
COMPANY PROFILE
Name: HyperSpace
 
Started: 2020
 
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
 
Based: Dubai, UAE
 
Sector: Entertainment 
 
Number of staff: 210 
 
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
Hili 2: Unesco World Heritage site

The site is part of the Hili archaeological park in Al Ain. Excavations there have proved the existence of the earliest known agricultural communities in modern-day UAE. Some date to the Bronze Age but Hili 2 is an Iron Age site. The Iron Age witnessed the development of the falaj, a network of channels that funnelled water from natural springs in the area. Wells allowed settlements to be established, but falaj meant they could grow and thrive. Unesco, the UN's cultural body, awarded Al Ain's sites - including Hili 2 - world heritage status in 2011. Now the most recent dig at the site has revealed even more about the skilled people that lived and worked there.

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Specs%20
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North Pole stats

Distance covered: 160km

Temperature: -40°C

Weight of equipment: 45kg

Altitude (metres above sea level): 0

Terrain: Ice rock

South Pole stats

Distance covered: 130km

Temperature: -50°C

Weight of equipment: 50kg

Altitude (metres above sea level): 3,300

Terrain: Flat ice
 

Pakistan Super League

Previous winners

2016 Islamabad United

2017 Peshawar Zalmi

2018 Islamabad United

2019 Quetta Gladiators

 

Most runs Kamran Akmal – 1,286

Most wickets Wahab Riaz –65

The specS: 2018 Toyota Camry

Price: base / as tested: Dh91,000 / Dh114,000

Engine: 3.5-litre V6

Gearbox: Eight-speed automatic

Power: 298hp @ 6,600rpm

Torque: 356Nm @ 4,700rpm

Fuel economy, combined: 7.0L / 100km

COMPANY%20PROFILE%20
%3Cp%3E%3Cstrong%3ECompany%20name%3A%20%3C%2Fstrong%3ETerra%3Cbr%3E%3Cstrong%3EStarted%3A%3C%2Fstrong%3E%202021%3Cbr%3E%3Cstrong%3EBased%3A%3C%2Fstrong%3E%20Dubai%3Cbr%3E%3Cstrong%3EFounder%3A%3C%2Fstrong%3E%20Hussam%20Zammar%3Cbr%3E%3Cstrong%3ESector%3A%3C%2Fstrong%3E%20Mobility%3Cbr%3E%3Cstrong%3EInvestment%20stage%3A%3C%2Fstrong%3E%20Pre-seed%20funding%20of%20%241%20million%3Cbr%3E%3C%2Fp%3E%0A
Game Changer

Director: Shankar 

Stars: Ram Charan, Kiara Advani, Anjali, S J Suryah, Jayaram

Rating: 2/5

COMPANY PROFILE

Company: Bidzi

● Started: 2024

● Founders: Akshay Dosaj and Asif Rashid

● Based: Dubai, UAE

● Industry: M&A

● Funding size: Bootstrapped

● No of employees: Nine

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Tips for job-seekers
  • Do not submit your application through the Easy Apply button on LinkedIn. Employers receive between 600 and 800 replies for each job advert on the platform. If you are the right fit for a job, connect to a relevant person in the company on LinkedIn and send them a direct message.
  • Make sure you are an exact fit for the job advertised. If you are an HR manager with five years’ experience in retail and the job requires a similar candidate with five years’ experience in consumer, you should apply. But if you have no experience in HR, do not apply for the job.

David Mackenzie, founder of recruitment agency Mackenzie Jones Middle East