Post by account_disabled on Dec 6, 2023 11:18:35 GMT
Currently, the greatest obstacle for emerging markets is the Russian invasion of Ukraine. As a result of the war, emerging market assets have suffered the most. In the first quarter of 2022, the MSCI Emerging Markets C Level Executive List Index was down -7%. The negative effects of the war have most affected countries economically linked to Russia, including the Polish, Hungarian, Czech and Egyptian markets. Paradoxically, the Brazilian market benefited from the rise in secondary commodity prices. The Brazilian stock exchange recorded $14 billion in revenue in Q1 2022, thanks to which the MSCI Brazil USD index grew by 35% in the January-March period this year.
Peru and Colombia were also not affected by major fluctuations. The energy and fast-moving goods sectors in particular were shaken. Russia has a not inconsiderable impact on raw material markets (metals, crops), as one of the world’s largest exporters. The most dramatic food situation is recorded in Egypt, where 85% of imported wheat was from Russia and Ukraine. If Russia occupies part of Ukraine and sanctions on it are not lifted then commodity prices will remain high and global GDP growth will decrease by 1-2 pp. Inflation will rise by about 4% and may remain at that level for several more years.
The sectors that will be most affected are pharmaceuticals, food, restaurants and utilities. Unfortunately for emerging markets, this is a very pessimistic scenario, which will significantly hinder the economy’s growth. According to analysts at Lazard Asset Management, the war in Ukraine has exacerbated the sell-off in emerging markets bonds. The bond slump was triggered by central banks raising interest rates due to rising inflation. Perhaps in the future, the situation will stabilize and the financial crisis will be resolved. However, this is mainly dependent on the outcome of the war and Russia’s subsequent actions.
Peru and Colombia were also not affected by major fluctuations. The energy and fast-moving goods sectors in particular were shaken. Russia has a not inconsiderable impact on raw material markets (metals, crops), as one of the world’s largest exporters. The most dramatic food situation is recorded in Egypt, where 85% of imported wheat was from Russia and Ukraine. If Russia occupies part of Ukraine and sanctions on it are not lifted then commodity prices will remain high and global GDP growth will decrease by 1-2 pp. Inflation will rise by about 4% and may remain at that level for several more years.
The sectors that will be most affected are pharmaceuticals, food, restaurants and utilities. Unfortunately for emerging markets, this is a very pessimistic scenario, which will significantly hinder the economy’s growth. According to analysts at Lazard Asset Management, the war in Ukraine has exacerbated the sell-off in emerging markets bonds. The bond slump was triggered by central banks raising interest rates due to rising inflation. Perhaps in the future, the situation will stabilize and the financial crisis will be resolved. However, this is mainly dependent on the outcome of the war and Russia’s subsequent actions.