atans1

2015: FT thinks PinoyLand safe haven

In Emerging markets on 04/01/2015 at 9:55 am

An Indian FT loves PinoyLand. Why doesn’t he relocate to Manila instead of living here? Maybe no goons with guns here, no traffic jams?

Where can investors hide if emerging markets get into trouble? 

In Asia, the country that comes closest to a sanctuary is the Philippines. Growth is rapid, and government finances are in much better shape than before. In a 2015 beauty pageant, the Philippines might lose out to some larger economies which could reap a reform-led bounty. Still, India and Indonesia are risky bets, while South Korea is flirting with deflation.

http://blogs.reuters.com/breakingviews/2014/12/30/where-to-hide-in-an-emerging-market-rout/

But he has a point: https://atans1.wordpress.com/2015/01/03/three-asean-mkts-in-top-10-performing-mkts-of-2014/

More on why emerging markets can get into trouble in 2015

Emerging markets follow the biblical rule of seven lean years followed by seven rich ones, according to Harvard University economist Jeffrey Frankel. Every fifteen years, a crisis erupts.

By that measure, a rout is almost due. Developing economies have seen six years of brisk credit growth, fuelled by cheap global money. Private and public debt has ballooned. Since the end of 2007, the surge has been 90 percent of GDP in China, 30 percent in Brazil, and 40 percent in the Czech Republic.

These types of excesses typically stop abruptly. Seven years of frenzied petrodollar recycling in Latin America ended with a debt debacle in 1982. A seven-year boom preceded the 1997 Asian crisis. The trigger for the next rout could be an uncontrolled rise in U.S. bond yields, leading to an exodus of capital from developing nations.

 

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