Trump’s win keeps EM investors guessing; Mexico faces uncertainty; Middle East, Turkey widen

By Christine Van Dusen

Atlanta, Nov. 9 – Emerging markets assets widened and some currencies – particularly the Mexican peso – suffered on Wednesday as investors and issuers absorbed the news of Donald Trump’s shocking win in the U.S. presidential election.

“While the S&P initially plunged by 5%, the Mexican peso has unsurprisingly taken the brunt and sold off overnight to trade as much as 11% weaker,” a London-based analyst said. “Both, however, recovered somewhat throughout the morning, with S&P futures still down circa 2.4% while the peso remains the underperformer, circa 8% versus the dollar. European stock markets also see a more measured start into the day.”

But many emerging markets currencies held in “relatively well,” the analyst said. “But this also comes on the back of the dollar weakness.”

Middle Eastern bonds opened between 7 basis points and 15 bps wider, though Abu Dhabi and Qatar managed to outperform, widening about 3 bps.

“In Turkey, sovereign credit default swaps widened by circa 12 bps to 277 bps while cash trades also 10 bps to 15 bps wider,” he said. “We see similar moves in the corporates and financials.”

Ukraine’s bonds on Wednesday morning were well-offered, with the sovereign’s 7¾% 2027s down by about two points, the analyst said.

Clearly Latin American assets – and those from Mexico, in particular – will be impacted significantly under Trump’s leadership, market sources said.

© 2015 Prospect News.
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