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Fri12152017

Last updateSat, 29 Jul 2017 12am

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Why Turkey Stock Plunged 14%

Two weeks ago the Istanbul 100 index hit its all-time high.  , the result of a decade-long bull market.  In 10 years, the Istanbul market has risen ninefold. Brazil’s stock market has risen 1.5 times in that period despite being a member of the BRIC club and having oodles of oil.  However, since May 22, the market has plunged 14%!  Turkey is seen to be the model of Islamic democracy in Arab’s world so what is happening to Turkey?

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When Fed Tapering…what would happen to the Emerging Markets

As the Fed hinted on ‘ending’ the quantitative easing, market nerves and volatility kicked in.  Many analysts warned of a repeat of 'history’ – where the punch-bowl of central bank stimulus had been taken away…"A sharp rise in rates that hurts bank stocks and the dollar would be risk negative, as was the case in 1987 (equity crash) and 1994 (bond crash), a host of 'canaries in the bond-mine' (mortgages, REITs, utility stocks, lumber) are indicating that markets are getting nervous about QE tapering, and suggest the next move in bond yields is more likely to be up than down." strategists at Bank of America Merrill Lynch wrote in a market note.

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When many stocks hit 52 weeks high…

US S&P 500 and Dow Jones Industrial Average has set a record high 16th times 21 times respectively this year till 2013-05-17 where S&P closed at 1,667.47 and DJIA 15,354.40.  For S&P 500, 141 companies touched 52 week highs on 2013-05-17 alone and another 128 companies reached new 52-week highs earlier in the week.  For NYSE, 538 stocks reached 52 week highs, the largest number since 2010-11-02.

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What are Factors causing the Aussie to weaken?

Since the start of the month the Australian dollar, or Aussie, has fallen 5.7 per cent to US$0.976 against US dollar, dropped 3.5 per cent to 64.24p versus the British pound and on a trade-weighted basis is down 4.6 per cent to 75. It is even weaker against the Japanese yen.  With the Aussie at an 11-month low against its US$, analysts are asking whether the world’s fifth-most traded currency has finally cracked and is now facing a permanent step-down.

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Impact of Weak Yen on Emerging Market Bonds

On 2013-04-04, Bank of Japan (BoJ) announced the launched of “quantitative and qualitative easing”. It promises to double the monetary base and to more than double the average maturity of the Japanese government bonds that it purchases. The monetary base will rise at an annual rate of Y60tn-Y70tn ($600bn-$700bn or 13-15 per cent of gross domestic product) and the average maturity of holdings of JGBs will increase from three to seven years. Furthermore, says the BoJ, it “will continue with the quantitative and qualitative monetary easing as long as it is necessary”. Add a comment

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