Not a member? Register | Lost your password?

Weekly Market Focus 13 August 2018

Markets

WEEKLY FOCUS                                                                                                     13 August 2018

 

Economic Indicators - Turkish fundamentals are weak
GDP Growth Rate 2%
Unemployment Rate 9.60%
Inflation Rate 15.85%
Interest Rate 17.75%
Balance of Trade -5,497 USD Million
Government Debt to GDP 28.30%
Foreign Exchange Reserves 130,875 USD Million
Deposit Interest Rate 16.25%
Cash Reserve Ratio 12%
Current Account to GDP -5.50%
External Debt 466,657 USD Million
Foreign Direct Investment 10,900 USD Million
Government Budget -1.5 % of GDP
Business Confidence 103 Index Points
Manufacturing PMI 49
Industrial Production 6.40%

 

Turkey and Argentina, two of the weakest emerging market economies have faced significant headwinds this year. Turkey’s currency, the Lira has lost nearly half of its value against the dollar in the year to date and its central bank has limited ammunition to stop its fall which intensified after a Trump tweet on Friday to double tariffs on steel and aluminium.


Investor sentiment about Turkey weakened as President Erdogan has tried to control the central bank’s policy and business activity in general as the inflation rate hit 15% and the current account deficit make structural reforms difficult. It is worth noting, however, that in terms of bank contagion or trade linkages, the impact to Europe is limited and largely manageable so far.


As investors unwind carry trades, questions about contagion to other emerging economies (as was the case during the Asian crisis of the nineties) have surfaced. So far South Africa, India, Indonesia, Russia and Mexico look to be on the receiving end of the carry trade unwinding, but it is worth noting that these economies have stronger macroeconomic fundamentals and most South Asian economies now have a current account surplus in stark contrast to the crisis of the nineties.


After a stellar earnings season for S&P500 companies draws to a close, we have a lighter economic calendar and the focus should return to which sector is likely to outperform on a relative basis in the coming quarters.

 

 

Value

Week

YTD

Equity Indices

 

 

 

S&P500

2,833

-0.25%

5.97%

S. Africa

3,499

0.07%

-7.69%

FTSE100

7,667

0.10%

-0.27%

DAX

12,424

-1.52%

-3.82%

CAC40

5,415

-1.17%

1.92%

Swiss Mkt.

9,031

-1.38%

-4.20%

FTSE MIB

21,091

-2.30%

-3.49%

Shanghai Comp

2,795

2.00%

-15.48%

BSE Sensex

37,869

0.83%

11.19%

Nikkei

22,298

-1.01%

-2.05%

Major currencies

USDZAR

14.10

5.84%

14.00%

EURUSD

1.14

-1.35%

-4.89%

GBPUSD

1.28

-1.84%

-5.52%

USDCHF

1.00

0.11%

2.16%

EURCHF

1.14

-1.24%

-2.83%

USDJPY

110.94

-0.30%

-1.55%

EURGBP

0.89

0.49%

0.66%

USDAUD

1.37

1.36%

6.87%

Dollar Index

96.22

1.33%

4.78%

Commodities 

Brent

72.81

-0.55%

8.88%

WTI Oil

67.63

-1.26%

11.93%

Copper

2.73

-0.76%

-16.71%

Aluminum

2,092.50

2.29%

-8.04%

Platinum

828.80

-0.44%

-11.32%

Sugar

10.54

-2.86%

-30.47%

Corn

357.75

-3.25%

2.00%

Coffee

107.00

-0.70%

-15.21%

Gold

1,211.10

-0.26%

-7.50%

Cotton

85.21

-3.36%

8.59%

Sovereign Yields

 

 

 

US10Y

2.87

(0.08)

0.47

UK10Y

1.24

(0.09)

0.06

Germany10Y

0.32

(0.09)

(0.10)

 

 

 

 

Contact: DBN +27 ( 0 ) 31 566 3365 | CPT +27 ( 0 ) 21 851 0920 | JHB +27 ( 0 ) 11 017 7230 | Email:enquiries@pegasuswm.com
Disclaimer: The research report has been prepared for information purposes and does not constitute an offer. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and the company accepts no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this report.
 

 



Twitter
Facebook
Connect with us