Saxo Bank Sees Opportunity in Emerging Markets Amid Falling Global Growth and a Tumultuous Start to Q4

          The plunge in the price of oil and other commodities has scores of emerging markets under severe pressure. And yet, it is in emerging markets that Saxo Bank sees most hope. As risks to global growth increase, the timing of a US interest rate move remains a shadow over such economies, but the very volatility this engenders creates its own trading opportunities.

          Emerging markets have been battered by a debt-induced perfect storm, a dizzy US dollar and crumbling commodities prices. However, according to Saxo Bank's Essential Trades for Q4, there is hope - and investment opportunities - even though the pretend-and-extend cycle of denial persists.

          Saxo Bank Chief Economist Steen Jakobsen, says: "The "pretend-and-extend" policy triggered a negative vicious cycle whereby EM-issued, dollar-denominated debt was converted into local currencies. Then, the stronger dollar increased both the debt burden and lowered commodity prices, a main export for many EMs. In turn, this meant less demand and less growth for EM. This happened in a world economy based on fiat money, dollar reserves, dollar-denominated commodities and debt and a rising US dollar. It's no wonder that world growth is falling dramatically - the only surprise is that policymakers seem surprised," added Jakobsen.

          Looking beyond the current volatility and rout in emerging markets, Saxo's Chief Economist, Steen Jakobsen sees a silver lining, commenting:

          "The perfect storm raging through emerging markets is also the biggest opportunity in decades."

          Steen Jakobsen believes the way to play this is via FX trades because of liquidity and access issues. Many EMs are not deep enough to cater for robust equity markets. Additionally, academic studies show more than 80% of all returns in EM come from FX and not from owning bonds and stocks. That said, Steen Jakobsen thinks EM overall are a buy. Steen Jakobsen believes the fact that we are in the midst of a perfect storm should not fool us into believing "the sun will never shine again".

          Saxo Bank key trading ideas for the next quarter are:

          - Commodities

          Commodities spent most of September stabilising after several raw materials, such as industrial metals, hit levels not seen since the beginning of the millennium. Rising supplies of key commodities from metals to energy and crops continued to play havoc with those EM countries whose prosperity depends on exports of raw materials.

          Saxo Bank's Ole Hansen expects that as we enter the final quarter of 2015, we will see light at the end of the tunnel for commodities assuming that supply is reduced. But if demand fails to keep up, the tunnel could grow even longer, leaving only a glimmer of hope.

          - Macro

          Mads Koefoed, Head of Macro at Saxo Bank says the long-awaited Federal Reserve rate hike will be the landmark fourth macro event. Emerging markets, however, remain a factor as the extreme weakness seen after the late-summer withdrawal of risk appetite may well prove overdone.

          - FX

          Head of Saxo Bank's FX Strategy, John Hardy, believes September's Federal Reserve decision signalled that Fed policy is global policy, and particularly so for emerging markets. Although Q4 could see risk appetite-related rebounds in currencies like the RUB, BRL, TRY, and ZAR, a more conservative approach would look elsewhere - to Mexico and to Poland, for example.

          - Fixed Income

          Saxo Bank's Head of Fixed Income Trading Simon Fasdal says fear infected markets during Q3 and remains a force to be reckoned with as we stand on the cusp of Q4.

          Fasdal argues that emerging markets are where the road to opportunity begins. Firstly, the overall rotation away from emerging market assets has increased the yield difference between developed markets and emerging markets significantly.  Secondly, the lack of growth is playing too big a factor.

          - Asia

          Saxo Bank's Asia Macro Strategist Kay Van-Petersen argues that although many feel the sell-off in emerging markets is overdone and we have seen the lows, he begs to differ. The cheap money that came out of the Fed's quantitative easing, as well as China's massive stimulus during the financial crisis, has inflated assets heavily. Global growth is decelerating, commodities have yet to find a floor, and EM assets have yet to catch up with the continuing deterioration of macro fundamentals.

          - Equities

          Saxo Bank's Head of Equity Strategy Peter Garnry says the third quarter of 2015 will be remembered as the big wake-up call as global equities spun into their most violent period, measured by the first and second derivative of volatility, since the 2008 financial crisis. Developed-market equities are down 6.2% for the quarter but emerging-market stocks are brutally down 16.2%.

          Garnry believes strong underlying forces in many emerging markets are transforming themselves from pure export-driven and commodity producers into more balanced economies with more growth coming from domestic consumption as the middle class grows. The transition is already happening, and capital will flow back into emerging markets as soon as there is clarity over the trajectory of US rates.

          To access the full list of trade ideas produced by Saxo Bank analysts which accompany the Q4 2015 outlook, please click here .

          About Saxo Bank

          Saxo Bank is an  online multi-asset trading and investment specialist, offering private investors and institutional clients a complete set of tools for their trading and investment strategies. Its financial community portal, TradingFloor.com, is the first multi-asset social trading platform. A fully licensed and regulated European bank, Saxo Bank enables clients to trade FX, CFDs, ETFs, Stocks, Futures, Options and other derivatives on both our award-winning  SaxoTrader and newly launched  SaxoTraderGO platform, accessible on PCs, tablets or smartphones through a single account and available in more than 20 languages. The platform is white-labelled by more than 100 major financial institutions worldwide. Saxo Bank also offers professional portfolio and fund management as well as traditional banking services through Saxo Privatbank. Founded in 1992, Saxo Bank is headquartered in Copenhagen and has offices in 26 countries throughout Europe, Asia, the Middle East, Latin America, Africa and Australia.

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Saxo Opens Access to its Trading Infrastructure With the Launch of OpenAPI

          Leads industry evolution by facilitating tailored user experiences within trading and investing

          Saxo Bank, the multi-asset trading and investment specialist, is one of the first financial institutions to give access to its trading infrastructure through the bank's new REST based API called open API. The move, which covers Saxo's multi-asset trading and back office infrastructure, will allow its partners, clients and external developers to access over 20 years of trading infrastructure innovation and enable them to customise their trading experience and create new revenue streams.

          The REST-based API will become available to developers allowing them to build tailor-made apps on Saxo Bank's infrastructure. It will further allow Saxo's institutional clients, including white label partners, to integrate Saxo's trading and investing capabilities directly into their own applications and systems.

          The Saxo OpenAPI will be unveiled at a conference today in Singapore, which also coincides with the launch of Saxo Markets, the bank's institutional business built around its three global hubs of Singapore, London and Copenhagen.

          Matteo Cassina, Head of Business Lines, Saxo Bank, said: "This is a step change not just for Saxo but for our industry as a whole. Our commitment is underpinned by our mission to democratise trading and make markets more efficient through innovation. For a long time the industry has grappled with the dilemma of building versus buying, but the pace of technological change has made it impossible for institutions to maintain an edge when it comes to innovation. The result is a paradigm shift from a business-to-customer economy to a so-called collaborative economy.

          "The accelerated adoption of technology and the increase in mobile business-to-customer interaction presents a huge growth opportunity for our partners, offering the potential to multiply trading volumes, create new revenue streams and protect their businesses against rapid digital change," added Cassina.

          The Saxo OpenAPI is the foundation of SaxoTraderGO, the next generation platform launched by Saxo earlier this year which has already seen 30% of Saxo's own clients migrate to the new platform. The platform will be available in October to Saxo's white label clients, consisting of over 120 financial institutions globally already using Saxo's technology to facilitate trading for their end clients.

          Christian Hammer, Head of Platforms, Saxo Bank, said: "REST is already widespread among tech giants who have built entire business models around Open API. The financial industry however has been late to the party. Some banks already offer access to third party developers to build specific features or apps but we are offering much deeper functionality and access to our entire trading infrastructure. We are essentially decoupling our infrastructure from the user experience to become a trading facilitator."

          The OpenAPI will cover the whole trading lifecycle including access to over 30,000 instruments, the ability to monitor positions, balances and margin from a single API. To enable external developers to program against the OpenAPI Saxo is launching a Developers Portal with comprehensive documentation, libraries, sample code and technical support. OpenAPI uses SignalR and WebSockets to achieve the best possible performance and lowest latency. For authentication and security control the OpenAPI also uses a combination of industry proven SAML and OAuth 2.0 protocols.

          About Saxo Bank

          Saxo Bank is an  online multi-asset trading and investment specialist, offering private investors and institutional clients a complete set of tools for their trading and investment strategies. Its financial community portal, TradingFloor.com , is the first multi-asset social trading platform. A fully licensed and regulated European bank, Saxo Bank enables clients to trade FX, CFDs, ETFs, Stocks, Futures, Options and other derivatives on both our award-winning  SaxoTrader and newly launched  SaxoTraderGO platform, accessible on PCs, tablets or smartphones through a single account and available in more than 20 languages. The platform is white-labelled by more than 100 major financial institutions worldwide. Saxo Bank also offers professional portfolio and fund management as well as traditional banking services through Saxo Privatbank. Founded in 1992, Saxo Bank is headquartered in Copenhagen and has offices in 26 countries throughout Europe, Asia, the Middle East, Latin America, Africa and Australia.

          Source: Saxo Bank

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