Oil, populist leaders and US rates: a guide to emerging-market 2019 risks
SA’s election in May will be a key test for President Cyril Ramaphosa. If his party fails to win a significant majority, he may be forced to delay market-friendly reforms
Emerging markets are tentatively picking themselves up off the floor after a rout that wiped about $5-trillion off the value of stocks since January. But the reprieve may not last long. Rising interest rates in the US, a stronger dollar, Beijing and Washington’s trade war, lower oil prices and the emergence of populist presidents in Latin America’s two biggest economies could all weigh on markets. “The theory is dead simple: emerging-market assets have already bombed, so the downside, if things get worse, is much lower and if things recover they have greater potential to perform,” said Anthony Peters, an independent analyst formerly at Blockex in Chipping Norton, UK. However, “they have the potential to go much lower for much longer than anybody had ever thought possible”. The Fed and the dollar Investors will be carefully watching the US Federal Reserve after chair Jerome Powell was not as dovish as they had hoped in comments following the central bank’s latest interest-rate increa...
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