EM Preview for the Week Ahead - BBH

Analysts at Brown Brothers Harriman noted that EM's were truly mixed last week, pulled in both directions by both idiosyncratic risks and global developments.  

Key Quotes:

"MXN, BRL, and ZAR were the best performers on the week, while TRY, HUF, and RON were the worst.  

MXN gained despite signs that Trump will maintain a bellicose stance towards Mexico, but we think the peso remains vulnerable to further selling.  

Markets ignored reports that the PBOC has asked banks to limit lending, which we think is negative for growth and EM in general.

Several EM countries were either downgraded or had their outlooks cut last week, including Turkey, Nigeria, and Chile.  S&P affirmed China’s AA- rating but maintained a negative outlook due to rising financial risks.

 Our quarterly EM and Frontier Sovereign ratings models warn of a continued bias towards downgrades this year."