Wednesday, January 19, 2011
mercados emergentes, conforme o banco credit suisse
copiei aqui para melhor visualizar, pois no site sempre preciso mover a pagina para a direita e a esquerda para ler.
Global Trends
Emerging Markets in 2011: Booming With Some Risks
18.01.2011 Emerging markets continued to show solid growth and a strong stock market performance in 2010. This article looks at the themes which may shape these markets' investment context in 2011, as well as the potential risks ahead. The themes picked out are general trends in the emerging market universe. It is of course important to note that there are numerous differences between the regions and the individual countries.
Text: Thomas Herrmann, Nora Wassermann and Adelheid von Liechtenstein, Global Economic Research
Theme 1: Capital (in)flows
Despite the recent increase in bond yields, 2011 will continue to be characterized by historically low yields, reflecting the expansionary policy setups in the advanced economies. The growth prospects of the emerging markets and the general pick up in yields and returns imply capital flows into emerging markets. This has already been strongly visible in recent months. In global asset allocations, emerging market assets are still often underrepresented. Rising investor interest should imply ongoing inflows and rising asset prices.
While these capital inflows are generally positive, significant dependence on foreign funding can imply major risks. Firstly, they can be a source of instability if the inflows suddenly reverse. This is a concern for policy makers. Several crises in emerging markets seen over the past decades (such as the Asian crisis in 1997, Russia in 1998, Latin America in the 1990s) were linked to large fluctuations in capital flows. Secondly, the currency appreciation associated with the inflows can be an issue for non-commodity exporters. For non-commodity goods exporters such as South-East Asia's electronic goods exporters, the relative price increase of their exports threatens to erode competitiveness. Because of these two factors, policies to counter strong appreciation are likely to continue (see Theme 2).
Capital inflows in Brazil
Capital inflows in Brazil
enlarge
Theme 2: Policy response to these inflow concerns
Higher growth, output above capacity, tightening labor market conditions and asset price inflation would all imply the need to raise interest rates or tighten monetary policy in a similar fashion. But emerging market policy makers remain reluctant to do this. This reluctance is often linked to the first theme discussed. Media has been full of articles about the "currency war." To shield their currencies from appreciation or to avoid the risk of unwanted volatility in capital flows, many emerging markets have either intervened in the currency markets, refrained from tightening monetary policy by raising interest rates (or even cut rates to lower attractiveness for foreign investors), or introduced or began to discuss capital controls.
Brazil has been the most prominent example, following very strong capital inflows. It introduced a tax on foreign fixed income and equity investment in late 2010. Measures in other countries are being discussed in South Korea and Thailand, for example, and could follow in 2011. Countries affected by strong inflows will only be able to lean against appreciation pressure, but are unlikely to halt the process. Therefore other reform measures to ensure sustained competitiveness will need to be taken.
Emerging market consumption
Emerging market consumption
enlarge
Theme 3: Secular rise of domestic demand continues
In particular, the rising importance of domestic demand remains an important theme, with emerging market consumption now almost exceeding the previously dominant US consumer in US dollar terms. While infrastructure build-up remains a key growth driver and is a prerequisite for future growth, private investment and consumption are also important.
Theme 4: Moving toward greater emerging market interdependence
While the correlation has become slightly less pronounced in some cases, emerging markets cyclical swings are still very much in sync with the major economies' cycles. So the much-discussed decoupling probably is not there yet and will probably never emerge in an ever more integrated global economy. However, cyclical interdependence between emerging markets through trade is increasing and this can help to buffer shocks emanating from the developed economies. China in particular has become more important as a source of demand for the rest of the emerging market world. Intra-emerging-markets trade, also known as "South-South" trade, more than doubled between 1996 and 2010, from 6 percent to 14.4 percent.
Theme 5: Overall growth outperformance in the emerging markets
Putting all of the above themes together, Credit Suisse expects emerging markets to continue to grow more strongly than the advanced economies. Asia is likely to continue to be the fastest growing region within the emerging markets. Within Asia, India might actually outpace China in 2011. This development may be the beginning of a lasting trend.
Following growth moderation in the second half of 2010, momentum in most emerging markets is likely to pick up again going forward. Global economic indicators generally remain positive or even improve. Several factors should support more self-sustaining growth globally: generally expansionary policy setting, firms' cash richness and improving consumer sentiment. The growth outperformance continues to be based on a combination of, and to a varying degree; lower debt, higher possible productivity gains, domestic demand strengthening, generally better demographics and in several countries commodity richness.
What are the risks?
Risk 1: Global economic backdrop deteriorating
While especially the public (and in some countries private) debt issues in developed economies pose structural growth constraints, Credit Suisse does not expect a return to recession. The global recovery should continue without major disruptions, according to the bank's core scenario. However, if a major shock in the major economies occurred, such as major market disruptions or renewed write-downs of banks, emerging markets would suffer as well. Strong capital outflows with bigger market corrections than in the advanced economies could be the consequence.
Risk 2: Emerging market inflation
Despite regional differences, inflation has already become a bigger issue in emerging markets. Currently, this is strongly driven by food prices, as food has a bigger share in the inflation indices than in advanced economies. Growth has been more resilient than in developed economies and in the wake of the recovery, capacity utilization measures have increased strongly. Labor market constraints and wage inflation in China, for example, are also becoming more pronounced.
Core inflation is so far contained, but risks are generally higher in emerging markets than elsewhere. With low or even negative real interest rates, high "liquidity" due to interventions in currency markets and substantial capital inflows (which also tend to spur credit growth), not only goods inflation, but also asset price inflation could become a bigger risk.
Somewhat higher inflation in itself might not be the most pressing concern from an investor's point of view. If, however, policy makers have to react more forcefully, for example by raising interest rates, markets could react very nervously. The destabilizing effects that could stem from asset price inflation and possible asset price busts thereafter are more likely medium term. Again, associated capital flight and banking system problems could emerge as possible consequences.
Risk 3: Domestic and geopolitical issues
There are a number of both domestic and geopolitical political risks, which have the potential to impact economic performance and market developments in the emerging market space. The tensions on the Korean peninsula or a conflict with Iran could move back to the top of the agenda. Tensions with the latter could cause major disruptions for global oil supply, given the importance of the Strait of Hormuz. About 20 percent of the oil traded worldwide goes through this "checkpoint," according to the US Energy Information Administration (EIA).
Also, trade tensions have already become a more prominent issue, as a result of the "currency war” mentioned in theme 2. The relationship of the two main counterparts of these global imbalances, the US and China, will be particularly important to watch. Our base case is that the free trade will be preserved, but the US Congress' discussions about trade sanctions for China point to associated risks. China's handover of power to a new generation of political leaders in 2012 will continue to be prepared. A commitment to political continuity and especially a continuation of a pro growth stance is likely.
Risk 4: Dutch Disease?
The so-called "Dutch Disease" occurs when commodity exporting countries experience a structural currency appreciation and their export companies (outside the commodity sector) as a consequence struggle to compete with foreign companies. These countries' economies then become "dominated" by commodities, as non-commodity firms fail. Initially, the windfall profits can be large enough for general welfare to improve, but over the longer-term the lack of diversification can constrain their economic growth.
Global Trends
Emerging Markets in 2011: Booming With Some Risks
18.01.2011 Emerging markets continued to show solid growth and a strong stock market performance in 2010. This article looks at the themes which may shape these markets' investment context in 2011, as well as the potential risks ahead. The themes picked out are general trends in the emerging market universe. It is of course important to note that there are numerous differences between the regions and the individual countries.
Text: Thomas Herrmann, Nora Wassermann and Adelheid von Liechtenstein, Global Economic Research
Theme 1: Capital (in)flows
Despite the recent increase in bond yields, 2011 will continue to be characterized by historically low yields, reflecting the expansionary policy setups in the advanced economies. The growth prospects of the emerging markets and the general pick up in yields and returns imply capital flows into emerging markets. This has already been strongly visible in recent months. In global asset allocations, emerging market assets are still often underrepresented. Rising investor interest should imply ongoing inflows and rising asset prices.
While these capital inflows are generally positive, significant dependence on foreign funding can imply major risks. Firstly, they can be a source of instability if the inflows suddenly reverse. This is a concern for policy makers. Several crises in emerging markets seen over the past decades (such as the Asian crisis in 1997, Russia in 1998, Latin America in the 1990s) were linked to large fluctuations in capital flows. Secondly, the currency appreciation associated with the inflows can be an issue for non-commodity exporters. For non-commodity goods exporters such as South-East Asia's electronic goods exporters, the relative price increase of their exports threatens to erode competitiveness. Because of these two factors, policies to counter strong appreciation are likely to continue (see Theme 2).
Capital inflows in Brazil
Capital inflows in Brazil
enlarge
Theme 2: Policy response to these inflow concerns
Higher growth, output above capacity, tightening labor market conditions and asset price inflation would all imply the need to raise interest rates or tighten monetary policy in a similar fashion. But emerging market policy makers remain reluctant to do this. This reluctance is often linked to the first theme discussed. Media has been full of articles about the "currency war." To shield their currencies from appreciation or to avoid the risk of unwanted volatility in capital flows, many emerging markets have either intervened in the currency markets, refrained from tightening monetary policy by raising interest rates (or even cut rates to lower attractiveness for foreign investors), or introduced or began to discuss capital controls.
Brazil has been the most prominent example, following very strong capital inflows. It introduced a tax on foreign fixed income and equity investment in late 2010. Measures in other countries are being discussed in South Korea and Thailand, for example, and could follow in 2011. Countries affected by strong inflows will only be able to lean against appreciation pressure, but are unlikely to halt the process. Therefore other reform measures to ensure sustained competitiveness will need to be taken.
Emerging market consumption
Emerging market consumption
enlarge
Theme 3: Secular rise of domestic demand continues
In particular, the rising importance of domestic demand remains an important theme, with emerging market consumption now almost exceeding the previously dominant US consumer in US dollar terms. While infrastructure build-up remains a key growth driver and is a prerequisite for future growth, private investment and consumption are also important.
Theme 4: Moving toward greater emerging market interdependence
While the correlation has become slightly less pronounced in some cases, emerging markets cyclical swings are still very much in sync with the major economies' cycles. So the much-discussed decoupling probably is not there yet and will probably never emerge in an ever more integrated global economy. However, cyclical interdependence between emerging markets through trade is increasing and this can help to buffer shocks emanating from the developed economies. China in particular has become more important as a source of demand for the rest of the emerging market world. Intra-emerging-markets trade, also known as "South-South" trade, more than doubled between 1996 and 2010, from 6 percent to 14.4 percent.
Theme 5: Overall growth outperformance in the emerging markets
Putting all of the above themes together, Credit Suisse expects emerging markets to continue to grow more strongly than the advanced economies. Asia is likely to continue to be the fastest growing region within the emerging markets. Within Asia, India might actually outpace China in 2011. This development may be the beginning of a lasting trend.
Following growth moderation in the second half of 2010, momentum in most emerging markets is likely to pick up again going forward. Global economic indicators generally remain positive or even improve. Several factors should support more self-sustaining growth globally: generally expansionary policy setting, firms' cash richness and improving consumer sentiment. The growth outperformance continues to be based on a combination of, and to a varying degree; lower debt, higher possible productivity gains, domestic demand strengthening, generally better demographics and in several countries commodity richness.
What are the risks?
Risk 1: Global economic backdrop deteriorating
While especially the public (and in some countries private) debt issues in developed economies pose structural growth constraints, Credit Suisse does not expect a return to recession. The global recovery should continue without major disruptions, according to the bank's core scenario. However, if a major shock in the major economies occurred, such as major market disruptions or renewed write-downs of banks, emerging markets would suffer as well. Strong capital outflows with bigger market corrections than in the advanced economies could be the consequence.
Risk 2: Emerging market inflation
Despite regional differences, inflation has already become a bigger issue in emerging markets. Currently, this is strongly driven by food prices, as food has a bigger share in the inflation indices than in advanced economies. Growth has been more resilient than in developed economies and in the wake of the recovery, capacity utilization measures have increased strongly. Labor market constraints and wage inflation in China, for example, are also becoming more pronounced.
Core inflation is so far contained, but risks are generally higher in emerging markets than elsewhere. With low or even negative real interest rates, high "liquidity" due to interventions in currency markets and substantial capital inflows (which also tend to spur credit growth), not only goods inflation, but also asset price inflation could become a bigger risk.
Somewhat higher inflation in itself might not be the most pressing concern from an investor's point of view. If, however, policy makers have to react more forcefully, for example by raising interest rates, markets could react very nervously. The destabilizing effects that could stem from asset price inflation and possible asset price busts thereafter are more likely medium term. Again, associated capital flight and banking system problems could emerge as possible consequences.
Risk 3: Domestic and geopolitical issues
There are a number of both domestic and geopolitical political risks, which have the potential to impact economic performance and market developments in the emerging market space. The tensions on the Korean peninsula or a conflict with Iran could move back to the top of the agenda. Tensions with the latter could cause major disruptions for global oil supply, given the importance of the Strait of Hormuz. About 20 percent of the oil traded worldwide goes through this "checkpoint," according to the US Energy Information Administration (EIA).
Also, trade tensions have already become a more prominent issue, as a result of the "currency war” mentioned in theme 2. The relationship of the two main counterparts of these global imbalances, the US and China, will be particularly important to watch. Our base case is that the free trade will be preserved, but the US Congress' discussions about trade sanctions for China point to associated risks. China's handover of power to a new generation of political leaders in 2012 will continue to be prepared. A commitment to political continuity and especially a continuation of a pro growth stance is likely.
Risk 4: Dutch Disease?
The so-called "Dutch Disease" occurs when commodity exporting countries experience a structural currency appreciation and their export companies (outside the commodity sector) as a consequence struggle to compete with foreign companies. These countries' economies then become "dominated" by commodities, as non-commodity firms fail. Initially, the windfall profits can be large enough for general welfare to improve, but over the longer-term the lack of diversification can constrain their economic growth.
# posted by robertts12 @ 6:54 PM 
