Emerging Market Roundup: Greek Banks Decay, Fed Delay? -- Barron's Blog

        By Dimitra DeFotis
        Some headlines in emerging markets on a day in which the Vanguard FTSE Emerging Markets ETF ( VWO) :
        Brazil and Mexico currencies gained in reaction to an unexpected drop in U.S. retail sales, a negative for the U.S. economy that could signal a delay in the rise of U.S. interest rates. Reuters quotes a currency trader in Sao Paulo who said the Federal Reserve emphasized it will "look at data" before deciding on when to raise interest rates. See " Brazil, Mexico Currencies Firm On U.S. Retail Data."
        The iShares MSCI Brazil Capped ETF( EWZ) was up 0.3% but was down by as much after hours. Among Brazil companies, telecom Oi ( OIBR) rose nearly 5.8%, while Mexico's Wal-Mart de Mexico ( WMMVY) rose 3.8%. Mexico beverage giant Coca-Cola Femsa ( KOF) was flat despite a Barclays upgrade. See " Barclays Upgrade: Drink Up Mexico's Coca-Cola Femsa."
        As for Greece, Moody's thinks chances are slim that "cash placed outside the banking system [will] be deposited back into bank accounts. As a result, we expect that Greek banks' dependence on Emergency Liquidity Assistance [from the European Central Bank] is unlikely to reduce in any significant way this year" and will be more than 15% of total assets." Moody's also expects Greek banks' non-performing loan (NPL) ratio to increase to as much as 45% from 35% of all outstanding loans in December 2014. "Given that current provisioning levels are weak -- provisions only covered around 60% of NPLs as of December 2014 -- higher provisioning charges will raise solvency issues." As some of Prime Minister Alexis Tsipras' party abandon him before the key vote due Wednesday on the third bailout proposal from creditors, the Global X FTSE Greece 20 ETF ( GREK) fell nearly 9% Tuesday, and shares of the National Bank of Greece ( NBG) fell 5%.
        (END) Dow Jones Newswires

        July 14, 2015 17:47 ET (21:47 GMT)

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