The Best And Worst Of Emerging Markets

Tyler Durden's picture

We recently summarized the world's developed markets in one simple table and there was much 'redness' to go around. The following table provides a similarly broad-based view of the world's developing nations. Citi's Early Warning System heat-map provides an at-a-glance perspective of the emerging market currencies at most (and least) risk based on 12 indicators of economic and financial stress. As currency wars migrate contagiously from developed money-printers to developing 'growth engines' the table below suggests Hungary and South Africa at most risk and China and Thailand least.

Click image for legible huge version...


and the trend...


and what is behind the EWS Signal...


Source: Citi

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JeremyWS's picture

What's up with Argentina and its ridiculous rally over the past few weeks, up 24% YTD and 60% in past 50 trading days??

Tirpitz's picture

Referendum on the Malvinas islands coming up, oil returning home from the crumbing imperialist occupation.

And, not to be forgotten, their central banksters aren't kibbuz-trained, don't have to put their tribal obligations ahead of any duty towards their host state.

Freddie's picture

The Peronists have be gangsters forever like the central banksters who are even more vile scum.  

economics9698's picture

Why so much risk in Chile?

Half_A_Billion_Hollow_Points's picture

LOL @ the joke, but I think it could be due to their large exposure to China's demand.  


Edit:  actually, looking at the table, these guys are getting the Chilean numbers wrong.  There's some serious mistake here.

Panafrican Funktron Robot's picture

"There's some serious mistake here."

A mistake from Citibank?  Get out of town!

What I took from this is "even if they managed to calculate this shit correctly, they're still calculating bullshit", and more particularly, their metrics miss some important considerations around currency blowups, starting with Japan.  In a rush to return short term gains, Abe and the hedgies that rode that pony sowed the seeds of their own destruction.  Japan's bond market staying "up" was the thing that was propping the current global currency system.  It's continued move down is going to fuck shit up on such an incredible level, that you would have to be nuts to stay in any assets you can't touch (including "money" in your bank).  Because of this, I actually think Chile is in decent shape due to domestic energy and food production.  

chump666's picture

Because central America don't mind getting hammed with inflation once again.  They also have an obsession, like us, to kill off the currency and promote speculative bubbles, yes like us...

Argentina over the last year has has a huge black market in USDs to offset their sh*t currency, China has been doing the same - you can see stabilized bids on the DXY for the last 6mths. But... It ends. Our central banks are now going for broke, the DXY is looking like it will slide through 79 with ease, which should send it down to the low 78s.

Central banks and goverments fixed prices commie madness is causing crony capo spec trades and they are forcing you to speculate on the a tulip bubble from hell.


bobthehorse's picture

I'm far too stupid to understand those charts.

I'm retarded.

I need to go back to school.


Son of Loki's picture

good list. thank you.

Yen Cross's picture

 That was a great post Tyler. The E/Ms' will be on fire as long as Chair Satan keeps printing.

$ flows to the highest rate of return, in this ZIRP money factory.

 Risk/Reward ;-) Just make sure you do your due diligence before you invest in some third world [Banana Republic].

Whiteshadowmovement's picture


Hey Yen Cross, just out of curiosity what access do you have to EM stock exchanges from where you trade? For instance can you trade any subsaharan African exchanges other than SA? I had to go to a lot of trouble to set up accounts with local banks and brokers to get direct access to many of these EMs, its a bitch in my experience

Yen Cross's picture

Whiteshadowmovement I appologize for not responding sooner.   

Your questions are a bit vague. Are you looking to hedgeAre you looking for better leverage? I have EBS access. Yes, I can trade the kitchen sink.  When Tyler discusses risk, (credit spreads) you would be well advised to save those charts. (hyg and some others)


  Are you accredited?

Whiteshadowmovement's picture

Hi yen cross, apologies, looking back on it I was very unclear. No, I was just asking what your "reach" is through your broker/institutional account etc. I actually trade the markets in several African countries (I partly live in Cape Town and Africa is a big part of my focus) but I had to go through a lot of trouble in several cases to set up accounts to actually begin trading on some of these exchanges. Most western financial institutions I have found (with the exception of standard bank) dont have the ability to buy shares in Ghana or Zambia for instance

PS- yes, I work for a fund based in Switzerland but I run my portfolio unleveraged, so leverage is not the issue, im just curious as to whether you have ever tried to trade some of these developing markets and if you had to go through the same red tape I did.

Thanks again

Yen Cross's picture

 Thanks for the clarity. You are an experienced trader looking for global flexibility. I have made friends through private placements, and purchased some strategic real estate to put my foot in the door

 If You take some risk foreign banks like you.  As an example/ 12 years ago  (A) banker from  Queensland Bank. I purchased some land and developed it[ I put 300k in a 1.2k project]. I needed loans for the improvements, hense the banker opened (cash flow accounts).

 End of story. I used the equity in our project to build [good will], and was able to make everyone some money , while doing some good improvements. I now have open credit in Australia.

Whiteshadowmovement's picture

Yes, thats more or less what Im saying, ideally id like to find a single truly global platform so im sort of looking to see what real life experience people have had in accessing these markets as Ive had.

Ive set up trading accounts in many African countries, even Zimbabwe (through standard bank in South Africa). The problem is really the execution. The whole point of my fund being domiciled in switzerland is tax reasons of course and we do our institutional trading at a major swiss bank (id prefer not to say which) but they have limited access to many of these markets which not only means finding local partner banks/brokerages to actually execute orders in Accra or Harare etc. But finding making this framework happen has been a real run around as I needed to set up subsidiaries etc. If I could fine a single TBTF to handle such trades in certain exotic countries, i would take my business there.

I also trade the Bulgarian stock market for instance and you wont believe how long it took me to find a respectable european bank with access to the sofia exchange!

By the way interesting story on your project in australia. Ive done a few real estate projects in South Africa and here the banks have very draconian laws about lending to foreigners (left over from Apartheid days) which actually wound up insulating the country fairly well during the crisis. Interestingly, no matter how AAA, they are forbidden from lending more than 50% on any equity and prime interest here is 9%. I primarily took loans on projects as a currency hedge as the currency drops extremely fast on some occasions so one gets great opportunities to pay down debt at a discount

Yen Cross's picture

 You want to open bank accounts in foreign countries. I told you how to do it.

  Invest in the economy, and earn good will. (it's all about trust)

Whiteshadowmovement's picture

Sorry not being clear again, Ive already opened accounts in lots of foreign countries, i was just wondering whether you or anyone else had direct access to any of these markets from a single platform (or most if not all). Thats all, sorry for the run-around.

I havent really had any issues as far as opening the accts is concerned in any way, if ou come with a meaningful amount of cash, trust is mostly established on the spot

OpenThePodBayDoorHAL's picture

someday one of the big global brokerages is gonna get a clue and win this opportunity, bigtime. Interactive Brokers or somebody should come along and get this done. I want to trade today in Cambodia, Laos, and Papua, but there's no easy way to do it

Whiteshadowmovement's picture

Yeah, thanks for your comment HAL, thats exactly it! I really wish I could find someone who actually has a single global platform. None of the TBTFs has it. If someone was configured to trade in both Laos and Ghana, theyd get my business tomorrow!

Sandoz's picture

If China, the source of most EM risk, is considered the least risky, then the EM market as a whole is in serious trouble. 

Yen Cross's picture

 Funny you say that. China in fact, had net F/X outflows 60 days ago. (then qe-3.5/4) changed things.

bank guy in Brussels's picture

China and Thailand are tops on the list because Marc Faber is there, Thailand and Hong Kong are his hang-outs

Philippines next in line to them, because people are really nice, European in attitude and the ladies very cute and wonderful

The Filipinos and Filipinas all learn English and now it turns out it is the best place to have an English-speaking call centre, some astonishing percentage of GDP there is growth in that area


Yen Cross's picture

A smart man you are. I was playing the North Africa ( mineral/metal) extraction trades. You learn something new every day.

  Thanks for the wisdom bank guy in Brussels.  +1

Tompooz's picture

Yes, Philippines looking pretty good, except for currency strengthening a bit too much for competitive comfort.

Real Estate still going up, but no irresponsible lending.  Doctors and nurses still cheap. Good destination for retirement and assisted living.

laosuwan's picture

the phillipines is a failed state; it just remains to play out.

espirit's picture

Onward to develop AFRIKA.  Where the rewards are great for the Kapitalists, and resistence to resource removal can be bought off for a planeload of AK's and RPG's.

disabledvet's picture

Seems to me the play is out of EM's because the "great commodity super cycle" is on its last legs (after the 2008 financial collapse.) those that have ramped up the debt engines to provide for "real product" and "real growth" have gotten decimated (gold miners come to mind.) those in the "ethereal" or "unreal" economy (media, consumer) have been HUGE winners. (Comcast, Wal Mart, McDonalds.) i think the first bubble to create them all (oil) will be the last to get clobbered...but that negative US GDP print is a warning shot across the bow of ALL speculators. we've had supercharged markets going on 4 years now...whether or not a correction is "called for" i certainly wouldn't argue that it's an unhealthy thing. "the liquidationists" ...irony of ironies...appear to have won the day. "entirely new industries will be created as a consequence."

OpenThePodBayDoorHAL's picture

Hot money, interest rate differentials, and commodities will continue to be the EM plague. But a few have large middle class consumer economies that will withstand the flows. I'm in Indonesia.

thismarketisrigged's picture

how the fuck is asia up every single fucking day? whenever they r up, they r also up like 1 percent, but whenever they r red( the rare times) its like a .02 percent loss.

i hope this is the week somehow that the markets start to collapse, but not holding my breath

laosuwan's picture

I threw in the towel a year ago. You cannot go short against people who have access to unlimited electronic dollars from the fed.


But, boy, when it goes, it will be a giant sucking sound and I hope there will be time to pile on with the shorts.

laosuwan's picture

This post is like an MBA student numbers crunching assignment. Go get data from official sources, trust the numbers without doing any digging beneath the surface, never even talk with anyone on the ground, crunch the numbers and make a logical recommendation based on data that leads to an erroneous conclusion.


Trust China's numbers? Like corruption and permanent smog cloud? go right ahead and invest there, see if you can repatriate your investment and any return you might actually achieve. Good luck to you.


Think Thailand is a good place to invest? Every man woman and child and the government are in debt way over their heads, but very good at hiding it from their balance sheets. Growth has stalled and the country is being bled dry by the Shinawatra crime syndicate. Look for a SET below 700 when it finally goes.


What's with all the red for Chile? Its probably the only place on the list you can legally own your investment outright, with no corruption, that's growing from development not excessive debt. The bubble is still a long way off in Chgile but guess what insolvent bank stupidly exited the Chilean market a few years ago in favor of more investment in China? Yes, that's right...the one that made this chart.


In this case, as hard to believe as it may be, Simon Black may actually be smarter than Marc Faber. Accidentally, of course.



omi's picture

Russia perfectly positions itself so that you have no idea what's going on.