Malaysia Beats Emerging Market Peers as Asia Outshines

Turkey has tumbled to bottom of the emerging-market pile, according to a Bloomberg analysis.

Ranked fifth out of 21 nations in a similar study six months ago, the country has slumped on a scorecard that includes metrics ranging from growth prospects to the state of the current account, sovereign credit ratings and stock and bond valuations.

Meanwhile Asia’s economies, which have stronger buffers against headwinds like Federal Reserve policy tightening, outshone the rest, with Malaysia holding on to the No. 1 spot.

Key Insights

• Turkey’s economy is forecast to grow 0.8 percent in 2019, down from an estimated 3.5 percent this year, according to a Bloomberg survey of economists. Inflation reached 25.2 percent in October, the highest level since 2003, eroding real yields
• Malaysia remained at the top of the list, thanks to its current-account surplus, relatively stable economic growth outlook and valuations. Data last week showed inflation came in at 0.6 percent in October from a year earlier, compared with its 10-year government bond yield of about 4.17 percent
• Four of the top six economies on the scorecard are from Asia, including China, the Philippines and Thailand. China and Thailand are drawing support from current-account surpluses, relatively strong growth and benign inflation. The Philippines’ current-account deficit and high inflation rates are partly offset by growth of more than 6 percent
• “A closer attention is now paid to economic growth outlooks of each emerging economy amid successive rate hikes,” said Tsutomu Soma, general manager of the investment trust and fixed-income department at SBI Securities Co. in Tokyo. “Investors are also deciphering how each country is impacted by the U.S.-China trade frictions. They will continue to be more selective with their investments given such circumstances.”
• Click here to see the previous scorecard

Scorecard

Rank	Country	Total	GDP	Current Account	Ratings	Reserves	Valuations
1	Malaysia	2.55	0.48	0.88	0.91	-1.00	1.27
2	Russia	2.36	-1.22	1.63	0.01	0.00	1.93
3	China	1.39	1.47	0.22	1.21	-1.00	-0.51
4	Philippines	1.00	1.44	-0.36	0.01	0.00	-0.09
5	Colombia	0.89	-0.48	-0.80	0.01	0.00	2.16
6	Thailand	0.87	0.20	2.52	0.61	0.00	-2.46
7	Poland	0.80	0.22	-0.07	0.91	-1.00	0.73
8	Mexico	0.79	-0.96	-0.41	0.61	-1.00	2.54
9	Chile	0.78	-0.06	-0.53	1.51	-1.00	0.86
10	Korea	0.75	-0.65	1.34	1.81	-1.00	-0.75
11	Indonesia	0.62	0.77	-0.70	-0.29	-1.00	1.84
12	India	0.48	2.06	-0.72	-0.29	0.00	-0.58
13	Peru	0.15	0.08	-0.39	0.61	0.00	-0.15
14	Hungary	-0.28	0.00	0.67	-0.29	-1.00	0.34
15	Brazil	-0.85	-1.13	-0.23	-1.18	0.00	1.70
16	Romania	-1.07	-0.03	-1.08	-0.29	0.00	0.33
17	Egypt	-1.58	0.88	-0.77	-1.78	0.00	0.09
18	Croatia	-2.21	-0.65	0.78	-0.58	-1.00	-0.75
19	South Africa	-3.07	-1.47	-0.98	-0.58	-1.00	0.95
20	Turkey	-4.06	-0.95	-1.00	-1.18	-1.00	0.08

Here’s how the scorecard is compiled

• Selected economies are either in the MSCI Emerging Markets Index or a Bloomberg Barclays measure tracking EM local-currency government bonds
• Valuations are computed based on real yields, price-to-earnings ratios for MSCI’s equity gauges and real effective exchange rates
• The numbers are Z-scores that measure deviations from the average of the economies covered in the case of GDP, current-account balances, ratings and real yields. The Z-scores for real effective exchange rates and P/E are based on historical comparisons
• For reserves, the economies that sufficiently meet the International Monetary Fund’s adequacy ratio get a zero score and those that fall short receive minus 1
• GDP growth and current account balances are from economist forecasts for 2018 and 2019 compiled by Bloomberg. Sovereign ratings are from S&P Global Ratings. Real effective exchange rates are based on JPMorgan Chase & Co. data

(Updates Malaysia’s 10-year government bond yield under Key Insights.)

Source: Bloomberg

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