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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EMERGING MARKETS
Executive summary
- Even though EM financials still appear ‘cheap’ based on a range of ‘fair value’ metrics, the current risk-off environment could continue to weigh on cyclical stocks.
- With growth expectations likely to be reviewed significantly to the downside, performance of financial equities could start to plunge in the coming months.
- In addition, China real money growth has also been pricing lower EM financials in the past 6 months.
Link to full publication:
The sharp contraction in China M1 money supply questions the sustainability of the momentum in EM cyclical stocks. The chart below that China real M1 money growth, which we compute as the difference between M1 YoY and PPI inflation, has strongly led EM cyclical stocks (financials) by 6 months in the past cycle.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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