From Breakingviews: Investors can discount IMF’s emerging-market gloom, argues Felix Martin
The reason for the seasonal gloom is that the IMF and World Bank regularly raise capital from their shareholders to fund concessional lending. This year, the IMF is asking donors to stump up more than $6 billion of additional contributions before the multilateral lenders' annual meeting in October.
Over the last twelve months, emerging-market currencies and bonds have passed two important tests. The first was the U.S. Federal Reserve hiking interest rates. Historically, monetary tightening in the United States has been kryptonite for emerging-market investors. Yet this time was different. Emerging-market currencies have been remarkably resilient over the past twelve months. The median major currency has weakened only around 2% against the U.S.
One reason for this resilience is that investors never cut these governments much policy slack in the first place. Unlike their counterparts in the developed world, less wealthy countries have not benefited from a decade and a half of near-zero interest rates. They could not rely on central bank bond-buying to help fund pandemic spending. Most important of all, many emerging-market central banks learned the lesson of previous cycles and raised rates early.
Yet if the surprisingly smooth navigation of the past year is noteworthy, the deeper structural changes in emerging countries are even more remarkable. The main reason emerging-market governments were so vulnerable to financial crises in the 1990s was their inability to develop local currency debt markets and their resulting reliance on dollar-denominated borrowing. This, coupled with chronic current account deficits and high levels of government indebtedness, invited periodic disaster.
México Últimas Noticias, México Titulares
Similar News:También puedes leer noticias similares a ésta que hemos recopilado de otras fuentes de noticias.
Breakingviews - Breakingviews: Fox is not out of the woods yetRupert Murdoch’s Fox will find that a damaged beast attracts more foes. The media company which operates cable network Fox News settled a defamation lawsuit on Tuesday for approximately half of the $1.6 billion sought in damages by the plaintiff, Dominion Voting Systems. In a statement, Fox acknowledged the court’s ruling “finding certain claims about Dominion to be false.”
Leer más »
Breakingviews - US-China chip spat hangs over TSMC's recoveryTSMC's China risks are growing. Quarterly earnings due on Thursday at the world's largest contract chipmaker are set to fall 5% year-on-year thanks to a global semiconductor glut, but demand should rebound later this year. Beijing's retaliatory strategy against U.S. chip sanctions is a bigger worry.
Leer más »
Breakingviews - UK growth hinges on more than a new pension giantBritain’s economy is gasping for air, starved of the oxygen of private investment. Politicians and financiers think a consolidation of the country’s pension funds would breathe new life into its stocks, startups and infrastructure. But while bigger pools might be good news for retirees, they wouldn’t necessarily solve the UK’s wider malaise.
Leer más »
Breakingviews - Worldline seeks to crack tough French payments nutWorldline’s boss Gilles Grapinet has spotted an opportunity to access a hard-to-crack payments market. The $12 billion group announced on Wednesday plans to set up a joint venture with French lender Crédit Agricole , which was looking for a new payments ally after ditching a past accord with bankrupt Wirecard. A partnership with Crédit Agricole will allow Worldline to enter Europe’s top market for merchant payments, which several domestic banks still handle directly. The joint venture, set to be operational in 2025, will see Worldline owning 50% plus one share, with investment of 80 million euros split between the two players.
Leer más »
Breakingviews - Allianz picks acceptable time to quit N26Allianz is striking a blow for forlorn investors of privately held startups. The $96 billion global insurer may sell all its 5% stake in N26 in a deal that values the German digital banking startup at $3 billion, the Financial Times reported on Wednesday. While that would be a 68% discount to N26’s $9 billion valuation as of October 2021, Allianz’s exit route looks agreeably straightforward.
Leer más »
Breakingviews - Bank chiefs move fluttering interest-rate needleBank bosses are adding some dramatic tension to the U.S. monetary policy saga. JPMorgan’s Jamie Dimon and Morgan Stanley’s James Gorman both warned during their first-quarter updates that inflation could prove stickier than expected, and that as a result the Federal Reserve might have to put rates up higher than the market is anticipating. It’s a possibility rather than a prediction, but when Wall Street’s highest and mightiest opine, it pays to listen.
Leer más »