PBR:Emerging Markets Evening Read,Barron's Blog
5:50p ET August 13, 2014 (Dow Jones)Barron's Blog
By Dimitra DeFotis
It was a day pockmarked with more conflict in the Middle East and Russia, and tragedy in Brazil.
A plane crash near Sao Paolo, Brazil killed presidential candidate Eduardo Campos, fueling a market selloff there.
Tensions escalated as Russia's convoy of humanitarian aide gets closer to Ukraine. Central and eastern European economies are the most vulnerable to the ongoing turmoil and resulting sanctions, given the volume of their Russian energy imports, writes Shweta Singh, a senior economist at Lombard Street Research. Turkey is next most vulnerable. With one of the biggest account deficits among emerging markets, it is more affected by rising energy prices and hampered exports, plus it has some risk tied to Russia's financial sector. More in Wall Street's Best Minds on Barrons.com (subscription required.)
Singh doesn't mention Greece, but its biggest trade partner is Russia. Sanctions against Russia are hampering export of Greek strawberries, peaches and other foodstuffs, and the malaise is expected to affect energy imports, as well as tourism to Greece from Ukraine and Russia, Bloomberg reports. Bottom line: recovery from a deep, multi-year recession will be that much tougher for Greece.
In India, inflation moved stubbornly higher, no thanks to the effect of monsoon rain on crop prices.
Broadly, the iShares MSCI Emerging Markets ETF ( EEM) was up 0.54% on the day.
The iShares MSCI BrazilCapped ETF ( EWZ) fell 1.45% was a big loser; Brazil's state-controlled energy company Petroleo Brasileiro ( PBR) tumbled 4.5%.
The Market Vectors Russia ETF ( RSX) and the iShares MSCI Russia Capped ETF ( ERUS) rose nearly 2% apiece.
The MSCI India ETF ( INDA) was up 0.7%.
regards.
