Stock Markets’ Sodden Sudden Upbeat Air

All core stock markets on the MSCI Index were up through April with the exception of single-digit losses in China, India, Greece and Qatar for a 5 percent composite gain, while frontier performance was barely positive at 1 percent with an even split between winners and losers, with Argentina, Estonia, Morocco and Tunisia ahead double-digits. Peru will be demoted to the latter roster after a 40 percent rise with its three illiquid stocks, despite an official tour to world financial capitals in an effort to keep its place. It also endured public relations bonds setback as holders of decades ago defaulted agricultural instruments placed international ads criticizing recent judicial decisions and pointing out the ability to cover a much larger chunk than authorized under the court formula. The Andean group including Chile and Colombia advanced almost 25 percent but Brazil paced Latin America with a 40 percent run with Vice President Temer and a technocrat economic team slated to take power over the course of the President’s impeachment defense and the Rio Summer Olympics. In an outgoing nod to Workers Party supporters she increased budget provisions for the popular family social transfer program that helped win re-election, and her allies have mooted proposals for fresh pools as a way around the controversial removal process. In Asia Thailand (+15 percent) led followed by Indonesia and Malaysia at 9 percent, while the Philippines girded for presidential elections with a law and order mayor and adopted daughter of a former president as front-runners. GDP growth continues to motor along at 6 percent, but overseas worker remittances may have definitively peaked with a new cycle as Persian Gulf hosts in particular emphasize youth local employment. In Europe, Hungary, Russia and Turkey climbed over 20 percent, with Budapest sustaining its 2015 outperformance despite bourse takeover by the central bank, which is under fire from watchdogs at home and abroad for poor account disclosure and management practice. Russia’s play is on low single-digit valuations for top listings and the prospects of further partial divestitures and sanctions easing. Istanbul was buoyed by a credible new central bank chief promoted from deputy, on solid 3 percent growth and a multi-year exchange modernization plan for more sophisticated products and cross-border listings.

In frontier markets Saudi Arabia’s 1 percent decline was minor compared to neighbors, but the further relaxation of entry and ownership  limits under the qualified foreign investor scheme met with little enthusiasm awaiting initiatives such as a future Aramco offering previewed under the Prince’s long-term economy strategy prepared with global consultants. In Eastern Europe Ukraine turned positive with the government reshuffle raising the odds of IMF aid release, while Kazakhstan plunged 12 percent on ratings downgrades and worse loan trouble in the property sector. Ghana and Nigeria were both down over 15 percent, as the former tries to uphold its Fund program fiscal fix and the latter dismisses any such resort with its no-devaluation stance while asking the World Bank for short-term project support. Jamaica, last year’s frontier winner also fell negative through April as the narrowly-elected administration tries to woo the business community on a US trip at a time when tourism excitement is minimal and drifting toward fresh destinations like Cuba.