The dollar will determine emerging market asset moves

2018 ◽  
Keyword(s):  
South Africa ◽  
Emerging Market ◽  
Bond Yields ◽  
Government Bonds ◽  
Content Type ◽  
Local Currency ◽  
Treasury Bond ◽  
Asset Class ◽  
Capital Outflows ◽  
Firing Line

Subject Emerging market asset gyrations. Significance Emerging markets (EMs) are under strain as the dollar has risen by nearly 4% since the middle of April, triggered by a sharp increase in US Treasury bond yields and increasing evidence of slower economic activity in the euro-area. Argentina and Turkey are in the firing line as they hold a high proportion of their external debt in dollars, but the entire EM asset class has suffered sizeable capital outflows, and year-to-date returns on dollar-denominated and local currency government bonds are now firmly negative. Impacts US sanctions could squeeze Iran’s oil exports, putting upward pressure on the oil price though US shale should cap prices below 80 dollars. Foreign holdings of EM local currency sovereign bonds, at risk of a sell-off, are highest in South Africa, Indonesia, Malaysia and Russia. Bank for International Settlements Chief Agustin Carstens recommends EMs build up reserves as “sometimes whatever comes in … will … go out”. For the Institute for International Finance, China, Argentina, South Africa and Turkey are high risk; Russia, Brazil and Philippines lower. US Fed Chair Jerome Powell has reminded investors that tighter monetary policy has been well signposted and should be “manageable” for EMs.

US-induced volatility clouds the 2019 markets outlook

2018 ◽  
Keyword(s):  
Financial Markets ◽  
Focal Point ◽  
Emerging Market ◽  
Bond Yields ◽  
Content Type ◽  
The Us ◽  
Treasury Bond ◽  
Asset Class ◽  
Main Support ◽  
Global Growth

Significance The idiosyncratic vulnerabilities that built up in financial markets in 2018 are morphing into a more pronounced global growth scare, exacerbated by concerns about the US Federal Reserve (Fed) being too hawkish. The combination of slower euro-area and Chinese growth and US monetary tightening is weighing on asset prices and increasing volatility after a year in which almost every major asset class suffered a loss. Monetary stimulus withdrawal is the focal point, as it has been the main support for markets since 2008. Impacts Ten-year US Treasury bond yields are down 50 basis points since April; global growth worries will make such ‘safe havens’ more attractive. Amid the worries, emerging market (EM) equities are up 1.5% from an October 29 low and may be more resilient than in previous downturns. The Brent crude oil price will be to the lower end of 50-80 dollars/barrel in 2019 amid growth and oversupply worries, reducing inflation.

Amid many unknowns, EM assets will remain strained

2017 ◽  
Keyword(s):  
Emerging Market ◽  
Treasury Bonds ◽  
Government Bonds ◽  
Content Type ◽  
Bond Yield ◽  
The Us ◽  
Equity Funds ◽  
Treasury Bond ◽  
Mexican Peso ◽  
Bureau Of Labor Statistics

Subject Emerging markets under strain from dollar rally. Significance The US Bureau of Labor Statistics reported on January 6 that average hourly earnings grew at the fastest pace since 2009 in December -- a further fillip to the ‘trumpflation trade’ that has gripped financial markets since the victory of Donald Trump in the US presidential election. Expectations of further Fed rate increases have driven the dollar index and the ten-year Treasury bond yield higher, straining emerging market (EM) assets. EM mutual equity funds have suffered a wave of uninterrupted outflows since Trump’s victory. The Mexican peso and the Turkish lira have plumbed record lows against the dollar. Impacts Many EMs are preparing to sell dollar-denominated debt in anticipation of higher borrowing costs, including Argentina, Brazil and Nigeria. Speculative bets against US Treasury bonds have risen to a record high amid expectations of higher US inflation and further rate hikes. The stock of negative-yielding government bonds stands at 10.8 trillion dollars, fuelling demand for higher-yielding securities. In April, the US Treasury’s next Foreign Exchange Report could label China a currency manipulator though the criteria would need to change.

Fed and ECB will ease Central European policy dilemmas

2019 ◽  
Keyword(s):  
Central Europe ◽  
Developing Economies ◽  
Emerging Market ◽  
Bond Yields ◽  
Treasury Bonds ◽  
Government Bonds ◽  
Content Type ◽  
Market Index ◽  
Dramatic Decline ◽  
Push Down

Subject Impact of global policy shifts on monetary policy in Central Europe. Significance The dramatic decline in euro-area government bond yields has helped push down yields across Central Europe, with bond markets now pricing in interest rate cuts in the Czech Republic, only a month after the Czech National Bank (CNB) increased borrowing costs to 2%. However, the scope for monetary stimulus in Central Europe is limited, thanks to inflationary pressures. Impacts MSCI’s index for Polish, Hungarian and Czech equities is rising, despite a slight loss for the broader emerging market index. Government bonds are rallying sharply in both developed and developing economies as ten-year US Treasury bonds fall. The Brent crude international oil benchmark has reached 65 dollars/barrel thanks to escalating US-Iranian tensions and dollar weakness.

Dollar trend to shape EM hard currency corporate debt

2015 ◽  
Keyword(s):  
Emerging Market ◽  
Government Debt ◽  
Corporate Bond ◽  
Corporate Debt ◽  
Content Type ◽  
Local Currency ◽  
Hard Currency ◽  
Property Companies ◽  
Asset Class ◽  
Bond Spreads

Subject Outlook for EM hard currency corporate debt. Significance Recent weakness in the dollar, which is currently trading at a two and half month low against a basket of currencies, is contributing to the strong performance of emerging market (EM) dollar-denominated corporate bonds, whose returns in the first four months of 2015 exceeded those on both EM local currency and dollar-denominated government debt. While improving sentiment is mainly due to the recent tightening in Brazilian and Russian corporate bond spreads, the marked deterioration in the credit quality of this asset class, in which Chinese property companies and Russian banks are the largest borrowers, poses significant risks given the fragility of market conditions. Impacts If sustained, the sell-off in global government debt markets could damage sentiment towards EM external and local currency sovereign bonds. The oil price rebound is contributing to the narrowing of spreads on dollar-denominated bonds issued by EM energy corporates. The measures taken by China's central bank to stimulate the economy will buoy sentiment towards the country's vulnerable property companies.

Brazil is critical corporate debt risk in region

2016 ◽  
Keyword(s):  
Latin American ◽  
Emerging Market ◽  
Corporate Debt ◽  
Sharp Rise ◽  
Government Bonds ◽  
Content Type ◽  
Local Currency ◽  
The Poor ◽  
Regional Index ◽  
Better Than

Subject Variations in the performance of regional corporate debt. Significance Annual returns on Latin American dollar-denominated corporate bonds fell nearly 9% last year, compared with gains of 19.0% and 3.5% for Emerging European and Asian corporate debt respectively, according to JP Morgan's benchmark corporate emerging market bond index (CEMBI). The poor returns on Latin American corporate debt stem mainly from sharp losses in both the Brazilian component of the CEMBI and the energy and infrastructure sub-sectors of the regional index. Impacts EM equities and currencies will continue to suffer significantly more than bonds. Debt markets -- in particular government bonds -- remain underpinned by demand from local institutional investors. Dollar-denominated EM bonds are faring better than local currency debt. However, the sharp rise in the dollar is endangering the ability of corporates to service their sizeable foreign debts. Despite increasing EM vulnerabilities, there are no signs of a systemic liquidity or solvency crisis similar to the 1990s.

Fashion designers' attitude-behaviour inconsistencies towards a sustainable business model: a neutralisation theory perspective

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asphat Muposhi ◽  
Brighton Nyagadza ◽  
Chengedzai Mafini
Keyword(s):  
South Africa ◽  
Online Survey ◽  
Emerging Market ◽  
Survey Study ◽  
Future Research ◽  
Cross Sectional ◽  
Content Type ◽  
Study Results ◽  
Sustainable Fashion ◽  
Fashion Designers

PurposeFashion designers in South Africa remain ambivalent in embracing sustainable fashion. This study examines the role of neutralisation techniques on attitude towards sustainable fashion. The study was conducted in South Africa, an emerging market known for water scarcity and pollution emanating from the textile industry.Design/methodology/approachA structured questionnaire was used to collect cross-sectional data from a sample of 590 fashion designers using a web-based online survey. Study constructs were drawn from the neutralisation theory and theory of planned behaviour.FindingsStandard multiple regression analysis results identified denial of injury, appeal to higher loyalties and external locus of control as the major rationalisation techniques influencing South African designers' negative attitudes towards sustainable fashion.Research limitations/implicationsResearch was conducted in South Africa where the concept of sustainable fashion is still at developmental stages. The generalisation of the study findings may be enhanced by extending the study to other markets with a fully developed market for sustainable fashion.Practical implicationsThe study results underscore the necessity of reducing social, structural and institutional barriers associated with the adoption of sustainable fashion. This study provides input towards efforts to develop attitude change strategies to stimulate designers to embrace sustainable fashion.Originality/valueThe research study contributes to theory, practice and future research.

Social enterprises and organizational learning in South Africa

2018 ◽  
Vol 10 (1) ◽  
pp. 117-133 ◽  
Author(s):  
Boris Urban ◽  
Elena Gaffurini
Keyword(s):  
South Africa ◽  
Organizational Learning ◽  
Social Innovation ◽  
Emerging Market ◽  
Cross Sectional Study ◽  
Social Enterprises ◽  
African Countries ◽  
Cross Sectional ◽  
Content Type ◽  
The Impact

Purpose The purpose of this study is to determine the relationship between different dimensions of organizational learning capabilities (OLC) and levels of social innovation in social enterprises. Design/methodology/approach The empirical strategy adopted is a cross-sectional study based on primary survey data. Following a survey of social enterprises in South Africa, statistically analysis is conducted using regression analyses to test the study hypotheses. Findings The findings show that the OLC dimensions of knowledge conversion, risk management, organizational dialogue and participative decision-making all have a significant and positive relationship with social innovation. Research limitations/implications In many emerging economies, the notion of organizational learning appears to have considerable potential relevance, particularly as African countries are moving toward knowledge-based economies. By focusing on OLC, it is anticipated that social enterprises can configure and leverage the different factors in ways that enable them to overcome the constraints of the complex and unpredictable environments and increase their levels of social innovation. Originality/value The paper provides a pioneering empirical investigation into the impact that OLC has on levels of social innovation, in an under-researched emerging market context.

The mediating effect of self-efficacy on the relationship between moral judgement, empathy and social opportunity recognition in South Africa

2019 ◽  
Vol 26 (2) ◽  
pp. 349-372
Author(s):  
Boris Urban ◽  
Jabulile Galawe
Keyword(s):  
South Africa ◽  
Self Efficacy ◽  
Emerging Market ◽  
Opportunity Recognition ◽  
Moral Judgement ◽  
Mediating Effect ◽  
Social Entrepreneurs ◽  
Mediation Effects ◽  
Content Type ◽  
The Relationship

Purpose Scholars researching entrepreneurship argue that the distinct characteristics of social entrepreneurs, together with the particular category of opportunities they pursue, invite us to further understand social entrepreneurship (SE) as a distinct field of investigation. The purpose of this paper is to investigate opportunity recognition behaviour of social entrepreneurs and closely related unique attributes of empathy, moral judgement (MRJ) and self-efficacy, in an emerging market African context. Design/methodology/approach A survey was administered to social entrepreneurs across two of the largest provinces in South Africa, namely Cape Town and Gauteng. Hypotheses were statistically tested using correlational analysis and hierarchical regression with mediation effects. Findings Results reveal that social entrepreneurial self-efficacy (ESE) plays a significant mediating effect in the relationship between MRJ and social opportunity recognition. Moreover, perceived MRJ and social ESE act as important determinants of increased social opportunity recognition. Originality/value This study has brought to attention the relevance of opportunity recognition to social entrepreneurs, while recognising their distinctive features in terms of empathy and MRJ. While self-efficacy and opportunity recognition are relatively well established in the traditional entrepreneurship literature, this study extends the reach of these variables into the SE domain.

Monitoring earnings management in emerging markets

2015 ◽  
Vol 31 (2) ◽  
pp. 86-108 ◽  
Author(s):  
Manel Hessayri ◽  
Malek Saihi
Keyword(s):  
South Africa ◽  
Earnings Management ◽  
United Arab Emirates ◽  
Ownership Structure ◽  
Emerging Market ◽  
Listed Companies ◽  
The Philippines ◽  
Content Type ◽  
Ifrs Adoption ◽  
Emerging Market Countries

Purpose – The purpose of this paper is to examine whether International Financial Reporting Standards (IFRS) adoption complements corporate governance factors (e.g. ownership structure) in monitoring managers’ discretional behavior in an emerging market context. Design/methodology/approach – The paper relies on a sample of listed companies in the United Arab Emirates, Morocco, South Africa and the Philippines during an eight-year period on average (four years of pre-adoption period and four years of post-adoption period). Findings – The authors find no evidence of lower earnings management after the switch to IFRS reporting, suggesting that managerial discretional behavior is insensitive to a firm’s IFRS adoption. However, the authors document effective monitoring role of a firm’s ownership structure on earnings management. More interestingly, institutional investors are effective in constraining earnings management when holding a high level of ownership. Moreover, the effect of blockholders and institutional blockholders varies as their ownership rises following a non-linear pattern. Research limitations/implications – First, the assumption that discretionary accruals are adequate measure of earnings management may be criticized in different ways. Second, the findings, performed on listed companies in the United Arab Emirates, Morocco, South Africa and the Philippines, should be interpreted with caution and cannot be generalized to all emerging market countries. Practical implications – Standards setters and market authorities should be aware of earnings management determinants to set adequate and fitting accounting standards limiting opportunistic behavior of managers and mainly to set up training programs to accounting professionals improving the IFRS implementation. Moreover, considering specific features of firms in emerging market countries related to ownership structure, international investors may rely on such criteria to evaluate firms. Finally, auditors should be aware of different incentives for earnings management in order to be able to detect eventual manipulation of accounting earnings. Originality/value – This paper provides a timely contribution to the continuous debate of the effect of IFRS adoption on earnings management in a poorly exploited setting, emerging market context. When investigating, additionally, the eventual non-linear effect of institutional ownership, block ownership, institutional block ownership and non-institutional block ownership on earnings management, a major contribution is that it brings to light the finding of a differential influence of ownership levels on earnings management.

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