Research & Insight
Turkish security forces have recently arrested almost 50 people as a result of revelations about an alleged plan, codenamed “Sledgehammer”, for a coup against the ruling AK party in 2003. Amongst those detained were the former heads of the Navy and Air Force, 15 ex-Generals and 32 incumbent officers. Last year another sweep rounded up over 200 people, including military personnel, lawyers, journalists and politicians in the Ergenekon conspiracy, also aimed against the AKP. The prominence of the people arrested and the scale of the operations reveals just how hard the fight between the secularists (who regard themselves as the preservers of the “legacy of Ataturk”) and the more populist and Islamic leaning ruling power is.
Following a reasonably positive start to the year, equity markets saw some profit taking to finish January lower. The MSCI Emerging Market index fell 5.6% vs. a 4.4% fall for AC World. Equities were hurt by concerns about Chinese monetary tightening, US banks over-regulation and by the increased risk of Greek debt default. Macro drivers turned negative: commodity prices were down 6% (as per the CRB Jefferies Commodity Index), oil prices fell 7%, EMBI spreads rose 30bp and the USD was up 2% (as per the DXY Dollar Index).
MSCI Asia ex Japan fell by 6.04% in USD in January 2010. Equities were hurt by Chinese policy tightening, the increased risk of Greek debt default and the announcement on US bank regulation. Because of this, various macro drivers were unhelpful such as falling metal and oil prices and rising EMBI spreads, and the rising USD affecting the carry trade. Asian earnings were still being upgraded, but this wasn’t enough to prevent investors reducing their exposure to risky assets including Asian equities.
Too much greed may kill the long history of a Korean Chaebol - Kumho Asiana Group.
China has been focused upon as an exciting destination with attractive growth potential - especially when considering the urbanization story and consumption from the large population. On the other hand, Korea has been viewed less so, it’s image of being a saturated market is perceived as offering little growth potential.
