commodity market: Smartkarma Research: China on the brink… commodities set to be crushed!

Our long-standing rule about Emerging Markets is that “…every EM Crisis is first-and-foremost a currency crisis”


Emerging Markets run on a heady mixture of fast-moving liquidity and volatile investor sentiment, which historically has taken succor from the pace of World economic activity. Both drivers are currently under negative pressure, so again we must urge investment caution.

Our monthly Emerging Market Liquidity Index (EMLI) is skidding badly, down to a reading of 29.3 for April (index range 0-100) from 38.6 at end-March. The biggest driver behind declining EM Liquidity is the renewed monetary tightening by China’s People’s Bank (PBoC). The World economy will falter badly as China’s monetary squeeze bites, and so commodity markets will get crushed.

Emerging Markets run on a heady mixture of fast-moving liquidity

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