Research & Insight

The “show me the money” artillery outrage shelling of Yeonpyong-do in South Korea following the equally resonant air bubble torpedoing of the RoK naval vessel, the Cheonan, make for good TV and have ensured that dynastic succession in the middle Kim-dom, the northern half of the divided peninsula, has dominated the headlines for the last year and a bit… since the reported stroke suffered by the middle Kim himself, Kim Jong-Il. Regime change or regime call for cash, or both? International high dudgeon and outrage is expressed! But the middle Kim carries on… just… together with his genius of artillery son, Kim Jung-Eun…stein.

November took back much of the gains experienced in emerging market debt on the back of Federal Reserve Board continued policy of “quantitative easing” of the past few months, with the JP Morgan GBI-EM Global Diversified falling 4.65% in US dollars. Year-to-date the index continues a positive return of 12.16%.

MSCI Asia ex Japan fell 1.47% in the month as worries over tightening in China and major concerns over the continuing viability of the Eurozone as an economic entity surfaced. The Eurozone woes were borne out of the very poor fiscal situations in the European ‘PIIGS’ which were highlighted by the bailout in Ireland.

November started well with markets continuing their upward march from a strong September and October. Markets then turned south to finish the month down -2.64% (MSCI EM) as worries over tightening in China and major concerns over the continuing viability of the Eurozone as an economic entity surfaced. The Eurozone woes were borne out of the very poor fiscal situations in the European ‘PIIGS’ which were highlighted by the bailout in Ireland. Adding to the noise, tensions between North and South Korea escalated with an exchange of artillery. The Korean market largely shrugged off these events with a meagre gain of 0.04%.

Hungary has found itself front and centre stage in recent weeks with asset volatility unusually high. The forint fell over 13% against the dollar in the last two weeks of November and nearly 5% against the euro for the month. In addition the 10 year borrowing rate increased almost 1.6% in the two months to the end of November.