GRAPHIC-Is it time for an August holiday ... from emerging markets?

jueves 28 de julio de 2016 12:24 GYT
 

By Marc Jones

LONDON, July 28 (Reuters) - Emerging market stocks have been on a red-hot run for most of the year, but having fallen for eight of the last nine Augusts investors are wondering whether it might be a good time to cash in and head to the beach.

As these graphic show (reut.rs/2a1QnPp)(reut.rs/2adgDT2) the dire August record since the 2007 financial crisis has included two drops of more than 9 percent plus another of over 8 percent.

Traders and fund managers tend to escape for their summer breaks in August so the moves can easily be amplified by tiny trading volumes, but other factors are also screaming caution this year.

As this graphic shows (reut.rs/2a2f12p), the current rise in emerging market stocks is the first time since December that they have moved in the opposite direction to oil prices which have been sliding again.

December divergence did not last long either and what is likely to be a concern for traders is that within a month stocks had buckled and slumped 14 percent.

While more emerging markets import oil than export it, a number of this year's star performers such as Brazil and Russia are major sellers and tend to be highly sensitive to its moves.

Gyrations in the dollar can have a big impact too, but there also tend to be hangovers after big central banks that are not the U.S. Federal reserve announce long-anticipated stimulus injections, something expected from Japan on Friday.

EM stocks fell 20 percent in 2011 a month after the Bank of Japan ramped up its money printers that August and over 17 percent after it did it for a second time in May 2013.   Continuación...