Hickey and Walters (Bespoke) submit:

Below we highlight the performance of major equity market indices in 81 countries around the world. While most of the world is struggling, there are 8 countries that are within 1.7% of 52-week highs. Sri Lanka, Chile, Bangladesh, and Venezuela are all basically at 52-week highs. Of the G-7 countries, Germany and Canada are closest to their 52-week highs at about -6%. The US ranks third out of seven at -12.74%, followed by Britain (-13.41%), France (-16.41%), Japan (-17.26%), and Italy (-23.63%). It’s not surprising to see Greece the farthest from its 52-week high at -50.15%. Other key countries that are more than 20% away from their 52-week highs include Russia, China, and Spain.

In terms of year to date performance (local currency), Bangladesh ranks first at +36.59%, followed by Estonia (32.86%) and Sri Lanka (31.87%). Of the G-7, Germany is doing the best with a decline of just -0.05%, followed by Canada at -1.74% and the US at -4.49%. Of the BRIC (Brazil, Russia, India, China) countries, India is holding up the best so far in 2010 with a decline of 4.62%. Brazil ranks second at -6.67%, followed by Russia at -7.54% and then China at -21.15%. Greece (-33.44%), Bermuda (-28.33%), and Spain (-26.55%) are down the most of any countries year to date.

Complete Story »

Craig Pirrong submits:

Wednesday Putin did his best King Canute impression, and ordered a group of financial regulators, including the finance ministry, to draft plans for an exchange to trade steel, coal, coking coal, and other metals. By 1 August. Putin believes the exchange will, in the words of the Moscow Times article just linked to, “avert price rows between producers and industry.”

In other words, even though no exchange anywhere has created successful spot or futures markets for steel and coking coal, and really for thermal coal either, in the 150 odd years since the advent of modern futures trading, Putin has commanded that Russia, which has never really created a successful commodity exchange for anything ever, do it in less than 2 months.

Complete Story »

Mark Boucher submits:

The problems in periphery European PIGS are similar to the problems of new entrants lined up to join the Euro. Hungary is their new poster-child. In each case competitiveness has deteriorated rapidly and currency devaluation would help solve the problem, but massive foreign currency denominated loans make devaluing a problem for huge private-sector debts. These countries do not yet have the huge government debt/GDP problems of Greece, but they face dilemmas that Hungary is an example of that could easily lead to government debt/GDP surging. This is therefore a potential next flare-up zone for contagion that investors must watch and could play if breakouts are clearly triggered.

Hungarian government debt/GDP is around 75% now, certainly above the Rogoff/Reinhart threshold of 60%, where problems start for emerging markets historically. Interest costs are a high 4.5% of GDP and represent 10% of government expenditure however because Hungary has kept its interest rates artificially high in order to try and preserve the exchange rate versus the Euro. The problem is that keeping the interest rate artificially high kills the economy, and a further contraction in the economy could send government debt/GDP through the roof quite quickly. The artificially high interest rate also hurts the current account, leading to bigger debt buildup. 10-year government bond yields hover around the 8% level, strangling an economy that is still contracting. Private sector foreign debt denominated in other currencies is 100% of GDP.

Complete Story »

David Hunkar submits:

Emerging market guru Mark Mobius, manager of the Templeton Emerging Markets Investment Trust says that the flight to safety into emerging markets has already begun as the demand for guaranteend income from investors gains momentum.

According to a news report, Mark said the following:

Complete Story »

Tom Lydon submits:

Investment inflows into the fast-growing economies of Eastern Europe and their exchange traded funds may have slowed last year and into this year, but those in the know suggest that this isn’t going to be the case for long.

Central and Eastern European countries may attract more foreign direct investment this year after a sluggish 2009, with only about half the investment seen in previous months. Peter Laca for Bloomberg reports that Eastern Europe, which relies on foreign investment to drive its economic convergence with more developed European Union nations, is in recovery mode after its worst recession in two decades.

Complete Story »

Michael Johnston submits:

With the developed markets of the world crippled by mounting debt, stagnant growth, and suddenly severe political risk, investors have undeniably begun allocating a larger portion of their portfolios to emerging markets. Boosted by ongoing urbanization, flexible and cheap manufacturing, and an abundance of natural resources, the developing economies have emerged as the leaders of the global recovery efforts, accounting for the vast majority of global economic growth as they further distance themselves from advanced economies.

The emerging markets exposure established by U.S. investors tends to be heavy in equities of Brazil, Russia, India, and China. The BRIC term was coined by an economist at Goldman Sachs in 2001 who argued that based on the rapid development, the bloc of countries would eclipse the world’s richest economies by 2050. The BRICs may be the best known and largest economies among emerging markets, but they’re hardly the only options. Below, we profile ten ETFs offering pure play exposure to non-BRIC emerging markets:

Complete Story »

Marc Chandler submits:

The zloty had sold off against the euro as the euro declined against the dollar. This was partly a function of unwinding risk trades, but also recall that in late Q1, the Polish central bank intervened in an attempt to slow the zloty’s rise.

That was then and this is now. After the tragic accident earlier this year, Poland has a new central banker, Marek Belka, a former prime minister who previously held senior posts at the IMF and United Nations and brings gravitas and credibility to the position.

Complete Story »

Craig Pirrong submits:

Complete Story »

Michael Johnston submits:

Two months after a tragic plane crash on Russian soil claimed the lives of Poland’s president and several top government officials, voters will head to the polls on Sunday to choose between two candidates with drastically different plans for the country’s future. Bronislaw Komorowski, a member of the pro-market Civic Platform party, maintains a moderate lead over Jaroslaw Kaczynski, the identical twin brother of the late president and leader of the conservative Law and Justice Party.

“Voters face a choice between two visions of the country’s future: a smaller state role and more rapid integration with the European Union, or more active government involvement in the economy and a more nationalist foreign policy,” writes Gordon Fairclough. If Komorowski wins, it could smooth the path for Prime Minister Donald Tusk’s plan to privatize state-owned companies, scale back pension programs, and raise the retirement age in an effort to cut the government’s budget deficit.

Complete Story »

Carnegie Endowment submits:

Uncertainty surrounding Russia’s statistical data¹ makes passing any unequivocal judgment on the economy’s current state impossible. The trajectory of the inflation rate is particularly ambiguous, and the May data offers little clarity. While bank credit has begun to flow again—from both private and state-controlled banks to both households and corporations—investment remains low, posing the biggest risk to the economy’s recovery. If strong investment growth does not materialize soon, the economy may be headed for a long period of stagnation.

Limited Potential for Lower Inflation

Complete Story »