5 China Charts That Look Bullish for Commodities

5 China Charts That Look Bullish for Commodities

By Frank Holmes

CEO and Chief Investment Officer

U.S. Global Investors

Over the past few months, investors have seen better economic data coming out of Europe. Consumer confidence in the continent has been rising, manufacturing data is improving and the fiscal situation is on the mend. Now, China appears to be strengthening as well, which could signal better times ahead.

Below are five charts that I believe look bullish for China and commodities. While not meant to be comprehensive, they do point to areas where investors might want to pay close attention.

  1. Economic Surprise Indices Improved in the U.S., Euro and China

An increasing amount of economic data releases are beating analysts’ expectations in the U.S. and Europe. In recent months, the three-month change in the economic surprise index for the U.S. has climbed considerably higher. It’s the same story for Europe.

These developments are positive for China as well because, as I have previously indicated, Europe and the U.S. are China’s largest export trading partners, and therefore, these areas have a large impact on the Asian country’s economic health.

Now, the economic surprise index in China is moving up to the “neutral zone,” says BCA Research. As a result, “China-sensitive commodity prices have risen,” says BCA, with A-shares, Chinese container freight traffic and spot iron ore prices all looking encouraging.

Rolling 3 Month Standard Deviation Economic Surprise Indices

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  1. Huge Jump in Flash HSBC China PMI

On Thursday, the Flash HSBC China Purchasing Manager’s Index (PMI) climbed to 50.1, which beat Bloomberg’s consensus of 48.2. This improvement in manufacturing data was largely driven by domestic demand, as all sub-indices rose except for new export orders.

Our research has shown that this move is positive for commodities. When the current number moves above the three-month moving average, it has historically signaled higher prices for crude oil as well as many energy and materials stocks over the following three months.

Chinas Jump in manufacturing

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  1. Rising Copper Imports into China

China is no longer reducing its inventory of many Chinese commodities, as imports of copper are on the rise, according to BCA. As you can see in Weldon’s chart below, in July, copper imports rose to more than 400,000 metric tons. This was the third month in a row that we saw rising Chinese imports.

As a result of this stronger import data, in addition to declining inventories, the price of copper climbed to the highest level since May.

Chinese Copper Imports Rise

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  1. China’s Crude Oil Imports Climbed to Record High

Crude oil imports also rose, climbing to a record high in July. Wood Mackenzie calculated that if oil imports continue rising, China could overtake the U.S. as the top oil importer by 2017, says Reuters.

Chinese Crude Oil Surge

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  1. China Continues “Growth-Friendly Policies”

Investors who followed the incredible infrastructure boom throughout China in the last decade may be waiting for that to happen again. Growth won’t happen at the same pace, as Beijing is very comfortable with its country’s slower rate and does not intend to introduce dramatic stimulus as it has in the past.

That doesn’t mean commodities won’t be in demand. The government will continue its investments in infrastructure, focusing on China’s transformation into a consumption-based economy. Improving income growth, urbanization, economic rebalancing and the well-being of its citizens are among the leaders’ goals.

As one example of the “growth-friendly policies,” BCA points out the massive increase in the country’s urban subway systems, as the “length of light rail and metro will be extended by 40 percent in the next two years, and tripled by 2020,” says BCA.

Chinas Light Rail Length May Triple

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China is not the only important factor driving resources. Here’s another key indicator to watch for commodities.

Index Summary

  • Major market indices finished mixed this week. The Dow Jones Industrial Average fell 0.47 percent. The S&P 500 Stock Index rose 0.46 percent, while the Nasdaq Composite gained 1.53 percent. The Russell 2000 small capitalization index rose 1.36 percent this week.
  • The Hang Seng Composite fell 2.61 percent; Taiwan dropped 0.65 percent while the KOSPI declined 2.60 percent.
  • The 10-year Treasury bond yield fell one basis point this week to 2.82 percent.

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Domestic Equity Market

The S&P 500 bounced back some this week after selling off last week on quantitative easing tapering concerns. Economic data remains mixed as higher yields are already having an impact on the housing market. New home sales fell sharply last month but this is being offset to some degree by stronger international data points out of Europe and China.

Domestic Equity Market - U.S. Global Investors

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Strengths

  • The materials sector was the best performer this week as chemical stocks led the way. Dow Chemical rose 5 percent, likely driven by better economic data out of China. Eastman Chemical and LyondellBasell were also strong performers.
  • Information technology wasn’t far behind as Microsoft rose by more than 9 percent on news that CEO Steve Ballmer will step down within the next 12 months.
  • Best Buy was the best performer in the S&P 500 this week rising 15.51 percent as the company reported better than expected quarterly results.

Weaknesses

  • The consumer staples sector was the worst-performing sector this week falling a modest 0.20 percent. This continues a recent trend in which traditionally more defensive sectors have underperformed in response to rising bond yields.
  • The financials sector was essentially flat for the week as REITs rebounded but that was offset by weak performance from insurance names.
  • Abercrombie & Fitch was the worst performer in the S&P 500 for the week, falling 20.07 percent. The company reported a very poor second quarter and significantly cut third-quarter guidance.

Opportunity

  • The current macro environment remains positive as economic data remains robust enough to give investors confidence in an economic recovery but not too strong as to force the Federal Reserve to change course in the near term.
  • Money flows are likely to find there way into domestic U.S. equities and out of bonds and emerging markets.
  • An improving macro backdrop out of Europe and China could be the next catalyst for the market to move higher.
  • Threat

  • A market consolidation could occur in the near term after such a strong year.
  • Higher interest rates are a threat for the whole economy. The Fed must walk a fine line and the potential for policy error is potentially large.
  • Seasonally, September is one of the worst months of the year and volatility coming into the Federal Open Market Committee (FOMC) meeting in mid-September should be expected.

The Economy and Bond Market

Treasury yields were mixed this week as the long end of the yield curve fell by a few basis points while the short-to-intermediate portion of the curve rose by a few basis points. The conventional wisdom has it that the Fed will begin “tapering” at the September 17-18 FOMC meeting as the minutes from the July 30-31 FOMC meeting did not clearly signal a different direction for policy. Fed policymakers have indicated a desire to begin winding down their quantitative easing program but recent economic data points are not making it easy. The economy has been sluggish, growing less than 2 percent in the first half of the year, and the recent increase in bond yields is already having an impact on activity as can be seen in the new home sales chart below. New home sales fell 13.4 percent in July, which was the biggest drop since May 2010 and complicates the Fed’s exit strategy.

New Home Sales

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Strengths

  • Global manufacturing indicators are starting to pick up, with China’s HSBC/Markit Flash Purchasing Managers’ Index (PMI) rising more than expected and into expansion territory.
  • The eurozone composite PMI hit the highest level in 2 years and is also indicating expansion.
  • The Conference Board’s index of leading indicators rose 0.6 percent in July, which bodes well for economic activity in the next six months.

Weaknesses

  • New home sales fell 13.4 percent in July, which was the biggest drop since May 2010.
  • Rising inflation and depreciating currencies are causing global central banks to raise interest rates.
  • The treasury market rallied on Friday but during the week the 10-year Treasury yield rose to new 52-week highs, nearing 2.90 percent.

Opportunity

  • Despite recent conflicting commentary, the Fed continues to remain committed to an overall accommodative policy.
  • Key global central bankers are still in easing mode such as the European Central Bank, the Bank of England and the Bank of Japan.
  • The recent selloff in bonds is likely an opportunity as higher yields will act as a brake on the economy and potentially become self-fulfilling, thus postponing Fed action.

Threat

  • Inflation in some corners of the globe is getting the attention of policymakers and may be an early indicator for the rest of the world.
  • Trade and/or currency “wars” cannot be ruled out which may cause unintended consequences and volatility in the financial markets.
  • The recent bond market sell off may be a “shot across the bow” as the markets reassess the changing macro dynamics.

Gold Market

For the week, spot gold closed at $1,397.52, up $20.65 per ounce, or 1.50 percent. Gold stocks, as measured by the NYSE Arca Gold Miners Index, rose 1.16 percent. The U.S. Trade-Weighted Dollar Index rose 0.15 percent for the week.

Strengths

  • Gold holdings in the world’s largest gold ETF rose 4.2 tons last week, marking a strong trend reversal from the first half of the year, as gold's recent positive momentum attracts investors. Meanwhile, jewelry demand in Indonesia, the world’s fourth most populous nation, is set to expand to a four-year high as consumers in Southeast Asia’s biggest bullion buyer join India and China in increasing purchases. Bloomberg reports that the consumption of necklaces, bracelets and rings will probably climb to 40 metric tons this year, a 30 percent increase from 30.8 tons in 2012.
  • Total gold available for delivery at COMEX is holding at record-low levels, according to Dundee Capital. Since August 1, the registered gold in the COMEX warehouse has declined by nearly 150,000 ounces to a new low of 791,000 ounces. Deliverable gold is now down 65 percent year-to-date. Bullion banks are likely struggling to deliver physical gold as we head into the peak seasonal demand for the metal. Perhaps this is why the one-month Gold Forward Offered Rate (GOFO) has been negative for 35 consecutive days, along with the negative six-month GOFO.
  • In preparation for an expected $15 billion in foreign direct investment in mining projects in Peru over the next two years, the country’s Ministry of Energy and Mines is working to slash the timetable for new exploration permits to less than 200 days, looking to establish the fastest exploration permitting schedule in Latin America. Previously, the permits took between 300 to 500 days. The Minister observed that mining generates about 30 percent of Peru’s national budget and that nearly 10 million Peruvians are linked either directly or indirectly to mining. We believe government policies are a precursor to change, and it looks as though Peru’s pragmatic government is setting up for near term success.

Weaknesses

  • Stifel Nicolaus announced its decision to close its Toronto and Calgary operations, effective Friday August 23. Stifel seems to have one of the better gold and precious metals research teams in the industry, and the decision from the executive office to close its operation on the back of two quarters of weak gold interest, could be seen as a signal of the last capitulation stages. We have previously noted how bullish these late-stage capitulation moves can be for a sector, especially for contrarian investors.
  • Gold Fields Ltd announced the reaching of an agreement with Barrick Gold Corp. to acquire its interests in the Yilgarn South Assets in Western Australia. However, during the company’s second quarter earnings conference call, management announced the withdrawal of the dividend. This was interpreted by the street as management kindly using shareholders cash to buy assets, which operate at above-average costs in the current low margin environment. Most worrisome is the fact that the acquisition represents a complete turnaround in strategy, as it defies prior commitments to streamlining operations and expanding margins. Expanding its footprint outside of troubled-South Africa however, could be a rational long term strategy. On the two days following the announcement, the market wiped out 16 percent of the company’s market capitalization.
  • B2Gold Corp. announced its offering of $225 million aggregate principal amount of convertible senior subordinated notes due 2018. The chatter on the street was that the proceeds would be used to make a purchase, with multiple names hitting the news, and sell-side analysts taking the opportunity to talk their books. The books were left open overnight in a move that highlighted that no broker appeared ready to commit to a bought deal, giving the opportunity to arbitrators to set a short position in the stock and a long position in the notes.

Opportunities

  • There appears to be a wide consensus about the Fed tapering this fall, however the first rate hike appears to be many seasons away, as the dollar and Treasuries could go anywhere. There is no denying that the one-month GOFO has been in negative territory for weeks, while the three-month rate has also been negative. The implications, according to BCA Research, are that in the three most recent episodes when the GOFO sank below zero, gold prices rallied on average by 14 percent.

Evidence of Physical Gold Demand

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  • All-in cash costs for silver equities are likely to fall further in the third quarter, according to a recent Dundee Capital Markets report. This is not to say that some silver producers have mines that are candidates for care and maintenance. However, Dundee reports that the average all-in cash cost in its silver miners’ equities coverage universe was $22.96 per ounce during the second quarter, down 7 percent from $24.73 per ounce in the first quarter of the year. With cost reduction programs continuing into the third quarter, and silver prices recovering at a faster pace than gold, the margin expansion makes silver stocks an appealing, operationally-leveraged vehicle to ride the precious metals’ recovery.
  • The NYSE Arca Gold Miners Index (GDM), which acts as the benchmark or underlying index for multiple funds, has made significant changes to its methodology which could cause impactful gold flows in September. The most relevant change is allowing non-U.S. listed companies to be constituents, which will have the GDM index change from a broad U.S. gold index to a large-cap/ mid-cap global gold index. At least 10 Canadian listed gold producers, as well as royalty companies, could be added as constituents.

Threats

  • The Indian government is falling into desperate measures in an attempt to cap its unsustainable current account deficit and the ensuing depreciation of the Indian rupee. The most recent move has the government deliberating whether or not to lease the 200 tons of gold it bought from the International Monetary Fund in 2009. According to our contacts in the region, the move would prove successful only briefly, as the second-most populous nation ignores its real problems, which include the following: 1) a massive and growing inefficient government 2) transfer payments increasing at unsustainable rates and 3) a net increase in jobs of zero, over the last five years. As far as gold is concerned, Indians do not trust their government and the more the government tries to stop them, the more gold they will buy. Given a complete lack of investment opportunities, people will keep buying more of silver and gold.
  • Purchases of new U.S. homes plunged 13.4 percent in July, the most in more than three years, raising concerns that rising mortgage rates will slow the real estate rebound. The reading was the weakest since October and was lower than any of the forecasts given by 74 economists which Bloomberg surveyed. The average 30-year mortgage rate has jumped more than 100 basis points in the past three months, prompting buyers to hold back and showing the difficult job ahead set out for Federal Reserve officials, as they try to reduce the pace of purchases while sustaining growth.
  • Once again, South Africa's main mine union is set to take a strike vote. South Africa's National Union of Mineworkers said it would ballot its members on whether to go on strike after wage talks stalled with gold miners, raising the prospect of yet another stoppage in the already stressed industry. The opposing sides remain poles apart after weeks of talks, with virtually no narrowing of the gap, according to Mineweb. Gold companies, which have slightly raised their starting offers, say the unions have failed to compromise.

Energy and Natural Resources Market

Chinas Copper Imports

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Strengths

  • Brent crude prices finished the week slightly higher at nearly $111 per barrel on geopolitical issues in the Middle East and stronger economic data from China.
  • China’s steel output rose in early August. China’s daily crude steel output for the first 10 days of August rose 2.7 percent to 2.14 metric tons per day (tpd), versus 2.08 metric tpd in the last 11 days of July. This recent figure annualized to around 760 metric tpd versus an output of around 709 metric tons in 2012. Year-to-date output through July totaled around 441 metric tons, up about 9 percent year-over-year.
  • Copper rose by 1.1 percent on Thursday, driven largely by more positive sentiment following China’s first “expansionary” HSBC PMI reading since April, at 50.1 in August, up from 47.8 in July. In Europe, Markit’s Composite Eurozone PMI was also up, reaching 51.7 from 50.5.
  • The global copper market slipped to its first deficit for seven months in May, according to the International Copper Study Group (ICSG), on rising demand in China and the U.S. ICSG reported apparent copper demand from top consumer China in May was at its highest level since December 2011, while usage in the U.S. was at its highest since March 2012.

Weaknesses

  • World industrial production was flat in June, the latest comprehensive data from economics group CPB shows. It also highlights the extent of the slowdown in growth in emerging economies’ factory output this year, with output expanding just 1.2 percent over the six months, its slowest rate over such a period since April 2009.
  • After reaching a year-to-date high last week, the Baker Hughes U.S. rig count fell 15 rigs to 1,776 this week and remains 7 percent, or 122 rigs below year-ago levels.

Opportunities

  • According to Wood Mackenzie, by the year 2020, 70 percent of China’s oil demand will come from imports. Reported by the Financial Times, analysts at the Edinburgh-based group, one of the most respected analysts of the oil market, said Chinese net oil imports would rise to 9.2 million barrels a day by 2020. The figure includes refined products such as diesel and gas as well as crude oil.
  • The number of ships waiting to load coal outside of Dalrymple Bay/Hay Point (the world’s largest met coal port in Australia) increased by 7 percent to 32 ships. This is a fresh 4 month and coincides with spot met coal price increases recently.
  • Chinese steel inventories are still falling. Chinese steel inventories in warehouses totaled 14.8 metric tons at week ending August 16. This change represents the 22nd consecutive weekly decline and compares to a 52-week high of 22.6 metric tons in March.

Threats

  • Proposed rule changes for metal warehouses and increased scrutiny by regulators are likely to unleash stored aluminum, adding to the global surplus and forcing more smelters to shut. However, the shift out of financing deals may take years and the resulting cuts in production capacity may take even longer. CRU estimates it will take until 2017 for the knock-on effects of new rules to force shutdown of 0.7-1.0 metric ton of capacity per year outside China compared to forecasted rise in aluminum surplus of 0.8-1.0 metric ton in 2014.
  • Reuters reported that Britain’s North Sea energy output will fall this year more sharply than forecast in February as aging fields grow less productive and need more maintenance, and it will not start to pick up until 2015, Oil & Gas UK said. The industry association also highlighted in a report on Wednesday that the production efficiency of existing North Sea oilfields “remains in worrying decline” despite an upsurge in investment this year.

Emerging Markets

Strengths

  • The Markit Eurozone PMI Composite Output Index signaled the largest monthly increase in business activity for over two years in August, according to the flash estimate. The PMI rose for the fifth successive month, up from 50.5 in July to 51.7, the highest since June 2011. Both manufacturing and services reported higher output in August, when manufacturing activity rose to a 26-month high, while the service sector activity rose to a 24-month high. So far, the third quarter is shaping up to be the best that the euro area has seen in terms of business growth since the spring of 2011, which should translate into rising emerging market exports.
  • Peru is now the second-highest rated country in Latin America following the raising of the nation’s long-term sovereign foreign currency rating by Standard & Poor. The credit rating agency raised its long-term sovereign foreign currency rating on Peru to BBB+ from BBB. The upgrade, spurred by President Ollanta Humala’s sound economic policies, will likely lower the cost of capital ensuring more companies get access to capital.
  • The HSBC China August flash PMI was 50.1 versus the market expectation of 48.2. PMI above 50 indicates industrial activities are in expansion territory. When the HSBC China flash PMI is above 50, this shows the export and small and medium enterprise sectors are recovering, driven by recovery in Europe.
  • China’s State Council issued further policy to support China’s railway reform and construction on August 19, 2013, stressing the direction in 1) enticing social capital for railway investment; 2) setting up “railway development fund”; 3) issuing railway bonds; 4) change railway cargo pricing to “government guidance” from “government fixed pricing”; 5) further subsidizing China Railway Corporation (CRC) in the next 2 years; and 6) accelerate construction progress to exceed original 2013 target.
  • China is to boost investments in building fiber optic and faster wireless networks to help stimulate consumption and drive economic growth. Under the plan, China will ensure half of its households to have broadband access by 2015 and 32.5 percent of cellular users will have access to 3G or other fast networks.
  • China’s July foreign direct investment rose 24.1 percent from 20.1 percent in June, better than the estimate of 14 percent.
  • The People’s Bank of China (PBOC), the central bank, injected Rmb72 billion this week to help lower the Shanghai Interbank Offered Rate (SHIBOR).
  • The Indonesian central bank (BI) along with the government has released policy measures to address the current account deficits and other macro-economic concerns. While these responses are sensible, the market continues to expect more definitive monetary policy responses from BI, which possibly include more rate hikes as well as continuing to let the rupiah to move towards the fundamental levels.
  • Hong Kong’s GDP growth was 3.3 percent for the second quarter, in line with market consensus.
  • Overseas Filipino worker remittances as of June year-to-date hit $11.8 billion, up 6.2 percent year-over-year.

Weaknesses

  • Emerging markets currencies declined significantly this week as the U.S. Federal Reserve minutes failed to provide clarity about the future of its quantitative easing program. Hardest hit were the currencies of countries with sizeable current account deficits, since the financing for such deficits is largely dependent on the U.S. money supply. In addition, some renewed strength in the Japanese yen, and the rise of U.S. Treasury yields are leading to the unwinding of foreign exchange carry trades, adding more pressure to emerging market currencies. The chart below shows the 1-, 3-, and 12-month performance of selected emerging market currencies.

account deficits weigh on Emerging Market currencies

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  • Mexico reported a highly disappointing GDP growth reading for the second quarter, as it also revised first-quarter growth downward. The weakness of economic activity in the first half of the year was worse than the markets anticipated, and increased speculation the central bank will lower its benchmark rate to spur growth. The data released on Tuesday, using the new base year (2008 vs. 2003), showed an annual growth rate of 1.5 percent for the second quarter, and a revision of first-quarter growth to 0.6 percent instead of the 0.8 percent reported previously. The growth decline was accentuated by severe deterioration in sectors that recently increased their weight as share of GDP, such as the construction and oil extraction industries.
  • The Philippines’ stock market PCOMP Index fell 5.58 percent in the two-trading day week. Foreigners sold $153.5 million, which is 19.67 percent of 2013’s net foreign outflow of $780 million.
  • China Merchant Bank announced it will sell an Rmb35 billion rights issue at HK$11.77, or a 17 percent discount to the close price on Thursday. This reminds the market that large upcoming fundraising by the mainland H-share banks will add pressure to the share prices which have already priced below net book value.
  • Hong Kong’s July Consumer Price Index (CPI) was 6.9 percent versus the consensus of 4.9 percent.
  • Thailand is theoretically getting into technical recession by having negative GDP growth for two consecutive quarters. The second-quarter GDP growth was 2.8 percent year-over-year (lower than the market expectation of 3.3 percent), but it was down 0.3 percent from the first quarter, while the first-quarter GDP growth was down 1.7 percent than the quarter prior. Thailand also kept the benchmark rate unchanged this week at 2.5 percent to maintain a lower Thai baht in favor of exporters.
  • Malaysia’s second-quarter GDP went up 4.3 percent, lower than the market expectation of 4.7 percent due to slower investments. The current account surplus was 2.6 billion Malaysian ringgit (RM), narrower than RM8.7 billion for the first quarter. CPI was 2.0 percent in line with consensus.
  • Indonesia’s second-quarter current account deficit widened to 4.4 percent of GDP, which triggered a big selloff in the stock market and its currency the rupiah.

Opportunities

  • Back in June, Bank of America Merrill Lynch published a very interesting strategy report arguing European equities outperform in an environment of rising interest rates. The report appears timelier now, following the recent positive macroeconomic readings out of Europe. In the study, empirical evidence shows there is a clear relationship between rising U.S. rates and European stocks outperforming U.S. stocks that holds over the last 40 years. Since 2000 a 1 percent fall in year-over-year returns in U.S. treasuries has coincided with a 100 basis point outperformance of European equities, with the majority of the alpha being captured in the 6- and 12-month periods after the rise in U.S. yields.

account deficits weigh on Emerging Market currencies

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  • No taper talk in Chile as borrowers take advantage of lower local currency financing costs. Chilean corporate financing costs in pesos are falling to the lowest in four years compared to borrowing abroad as speculation grows the central bank will cut rates for the first time since 2012. Since May, when Federal Reserve Chairman Ben S. Bernanke began talking about reducing monthly bond buying, the cost of funding in the Chilean peso versus the U.S. dollar reversed, making much more attractive for Chilean companies to issue locally. In view of the recent hostility and lack of appetite for lending in the international markets, companies have the opportunity to tap into local debt capital markets for interesting opportunities.
  • As shown in the graph below, the HSBC China flash PMI is back to expansion territory at 50.1 in August. Industrial activities improved due to the recent fiscal stimulus policies that were announced after Premier Li Keqiang showed his road map in supporting growth while undertaking reforms.

Chinas Jump in manufacturing

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Threats

  • Czech members of Parliament voted to dissolve the Lower House, paving the way for an early election. The move is the latest episode in a political crisis that began with the collapse of the center right coalition over a corruption scandal in June. Terms for the early election should be confirmed after discussions between the president and parliamentary parties, with the tentative date being October 25-26. The division among center right parties may offer the center left platform an opportunity to regain control of Parliament.
  • There is no denying the Fed’s roadmap affects the expectation of future interest rates and of term premium and, thus, will affect long-term interest rates in the U.S. and Latin America. Citi, in its Emerging Markets Economics research, identifies how a higher global interest rate environment threatens Latin America. A higher interest rate environment will lower capital inflows into the region and translate into lower credit growth. Furthermore, public sector balance sheets have improved over the past decade but remain vulnerable to lower growth and softer commodity prices. In this context, Venezuela and Argentina are the most vulnerable, followed by Peru and Brazil. Chile, Mexico, and to a lesser extent Colombia, are the least vulnerable countries to a capital market external shock.
  • Investor sentiment toward Association of Southeast Asian Nations (ASEAN) countries deteriorated after Fed tapering talk started this year. Foreign investors redeemed their investments in emerging market bonds and equities, ASEAN included, which added pressure on already weakened currencies. Particularly weak is the Indonesia rupiah which fell 5 percent against the U.S. dollar after Jakarta’s stock market fell 8.73 percent in the week. In an environment of rising yield and depreciating currencies, the fundamentals of the ASEAN economies are believed to be weakened temporarily, but can be re-strengthened after an adjustment to find their normality.

© Charles Schwab

www.schwab.com

© U.S. Global Investors

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