August is turning out to be chaos for emerging markets. Bonds and stocks from developing economies are poised for their worst monthly losses since last September after Nigeria’s central bank revealed it has less reserves than estimated, an outsider won primaries in Argentina and a presidential candidate was assassinated in Ecuador.
The two serial-defaulting countries are both in the midst of presidential elections, with investors left guessing. In Argentina, overseas bonds have tumbled since Javier Milei unexpectedly led in a closely watched presidential primary vote on August 13, with vows to abolish the central bank and dollarise the economy. The apparent rejection of a market-friendly government in the country is enough for Insight Securities’ Legaspy to recommends moving capital out of Argentina.