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Babies And Bathwater: Indiscriminate Selling Hits EM As Indonesian Stocks Dive, Rand Routed

It's indiscriminate.

Another day, another bloodbath in things that aren't called "S&P 500". The public comment period expires tomorrow on the proposed $200 billion in tariffs on additional Chinese goods and it looks like Trump is going to go ahead and move forward with those duties in what would mark the most seriously escalation yet in his efforts to plunge the world into protectionism. The psychological overhang from that was too great for Chinese shares, which buckled on Wednesday. Mainland equities fell sharply and in Hong Kong, the Hang Seng dropped the most since mid-June. Tencent was a train wreck, falling for a fifth day in six. The shares were down more than 4% on the day and just to reiterate, this is bad for emerging market equities on the whole: Regulatory risks are going to continue to haunt the company and that, in turn, is going to haunt EM stocks more broadly. Read more Tencent’s Latest Terrible, No Good, Very Bad Day Comes At Just The Wrong Time Tencent’s Hard Landing Is Stark Reminder Of Tech’s Fallibility Meanwhile, the rout in Indonesia is on. On Tuesday evening, we said the following: Argentina, Turkey, Brazil and South Africa are grabbing most of the headl
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1 comment on “Babies And Bathwater: Indiscriminate Selling Hits EM As Indonesian Stocks Dive, Rand Routed

  1. Francesca says:

    At least contagion stopped spreading against Italy. After Fitch confirmed its rating (but also negative outlook from stable) BTPs are rising, and today some italian banks in the main index FTMIB40 are up 6%. MIB40 is outperforming Europe for the 3rd day in a row.

    For every increase of the Bund-BTP spread of 100bp, Tier1 capital is affected by 20-100bp. So a 2-8% correction for italian banks was justified, but 30% was overdone. Apparently at certain levels fundamental investors buy. Some banks have a P/E of 6 now. Let’s see how long it will last. The budget to be presented to the EU is still hanging.

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