Market Overview

3 Emerging Markets That Could Suffer In 2015

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Emerging economies around the globe are struggling to keep their financial systems afloat as oil prices sink and the dollar continues to rise.

Many are worried that foreign governments will soon default on bonds taken out in the US dollar rather than their home currency, making investment in emerging markets riskier than ever.

Who Could Suffer?

Russia is perhaps the most notable emerging economy that could face hardship in 2015. The ruble saw sharp declines last year, despite the Central Bank of Russia's attempts to stem its fall. In the coming year, President Vladimir Putin will be faced with some tough decisions about whether to continue his involvement in Ukraine, or back off and repair relations with the West.

Economic sanctions against Moscow have added to woes caused by lower oil prices, making Putin's promises to restore the country to stability more challenging. For the moment, rapidly rising inflation is expected to continue well above 10 percent through 2015, and analysts are unsure about whether or not the central bank's rate hike will be enough to stop the ruble's decline.

Brazil is another large emerging economy to watch in 2015.

Most of the nation's economic reform plans are based largely on Petroleo Brasileiro Petrobras SA's (NYSE: PBR) success, but the company's shares have been sliding as oil exports lose value and corruption scandals create concerns about the company's stability.

Petrobras may also struggle alongside Virgolino de Oliveira SA, a sugar producer, with paying back debt. Both companies have taken out massive amounts of dollar-denominated bonds, which have exposed them to the dollar's rise.

Nigeria, finally, is another country which has been exposed to economic pressure and could struggle in the coming year.

Oil prices have taken a large toll on the country's income, as it depends almost solely on income from crude. Analysts are expecting GDP data to show the nation's first deficit in 15 years.

On top of oil-related issues, the country has struggled to keep violent, radical groups like Boko Haram from spreading. It could face political instability with national elections coming up in February.

Posted-In: PetrĂ³leo Brasileiro Petrobras SAShort Ideas Emerging Markets Opinion Markets Trading Ideas

 

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