Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
per week
for first 24 weeks

Enjoy unlimited digital access
Enjoy Unlimited Digital Access
Get full access to
Just $1.99 per week for the first 24 weeks
Just $1.99 per week for the first 24 weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(}function setPanelState(o){dom.root.classList[o?"add":"remove"](,dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

People are seen reflected on a window of a currency exchange store in Buenos Aires’ financial district, Argentina, Sept. 3, 2018.


Crippling financial crises in Turkey and now Argentina should come as no surprise. Inflation-ravaged emerging countries with massive foreign-currency debt have no safety cushion to withstand soaring financing costs stemming from tightening interest rates and years of bad fiscal, monetary and economic choices.

Argentina is notorious for the grief it has caused foreign investors because of a string of bond defaults, the then largest in history in 2001 and the most recent in 2014. Money began flowing back the next year when newly elected President Mauricio Macri signalled a new era of responsible fiscal management. Now, with the peso plumbing new lows, investors are again in full flight.

In Turkey, foreign capital began heading for the exits well before the latest slide of the country’s equally embattled currency, the lira. Foreign direct investment, a measure of confidence in the world’s 17th largest economy and its prospects, fell 16 per cent last year to US$10.9-billion.

Story continues below advertisement

Yet, even as bond investors were taking a Turkish bath in August, some emerging-market fund managers decided this was an ideal time to capitalize on the spreading doom and gloom by snapping up battered assets.

Turkey and Argentina may well make sense for distressed debt specialists and other speculators with deep pockets and strong stomachs. But most affluent investors tend to be far more cautious. And one thing they can do to avoid potentially wealth-destroying bets in markets such as Turkey, Argentina or Venezuela is to take a closer look at whether the government is genuinely committed to fiscal and economic reforms and an independent central bank, as well as at the people chosen to carry out those policies.

In Turkey’s case, investor risks have been magnified by a stubborn autocrat who values fealty over competence and has some peculiar notions on how to foster growth, curb double-digit inflation, manage the crumbling currency and deal with the soaring cost of financing foreign debt obligations.

To ensure his wishes go unchallenged, President Recep Tayyip Erdogan has named his son-in-law, Berat Albayrak, as Treasury and Finance Minister. Before selflessly devoting himself to public service, Mr. Albayrak ran a business that profited handsomely from close government ties. As the Turkish lira fell off a cliff, Mr. Albayrak appeared before a business audience sweating profusely while vainly trying to assuage international concerns about the fundamentals of the economy.

One analyst noted that his elevation to the country’s top economic post did not bode well for the independence of the central bank. But Mr. Erdogan took care of that problem in July, declaring that he would take charge of all senior central bank and monetary committee appointments.

The current central bank chief, Murat Cetinkaya, ranks among the world’s least effective central bankers, according to the latest annual report card issued by Global Finance magazine.

For investors looking for safer emerging-world opportunities, here are some markets where central bankers get high marks for effectively managing monetary policy and meeting economic growth targets while keeping inflation in check and meddling politicians at bay.


Beside neighbouring Argentina, Chile seems like a positive island of stability in a turbulent sea.

Chilean central bank chief Mario Marcel Cullell has even managed to boost his grade a notch to A at a time when the economy’s heavy reliance on copper exports makes it particularly vulnerable to weaker demand stemming from the worsening U.S.-China trade tussle and a slowdown in Chinese growth.

Unlike some of its profligate regional neighbours, Chile has the financial flexibility to weather these storms. Which explains why its sovereign bonds retain the highest rating in Latin America. Meanwhile, Chilean companies with an expanding global footprint, such as energy and forestry giant Empresas Copec SA, have also put themselves in a better position to withstand local or regional economic disruptions.

South Korea

Markets were surprised and relieved when Bank of Korea governor Lee Ju-yeol was handed a second four-year term in March, something that hadn’t happened in decades. This meant the 65-year-old career central banker would remain at the helm to steer a gradual tightening of policy during a period of rising trade friction, slowing growth, a hefty increase in public spending and a changing relationship with North Korea.

South Korean bonds have proved a popular haven for international funds at a time when a stronger U.S. dollar and soaring debt costs are roiling other big emerging markets around the world.

Story continues below advertisement


The ruble has taken yet another beating in the emerging-currency fallout from the meltdown of the Turkish lira and worries about stiffer U.S. sanctions. But unlike Turkey, Russian finances are in good shape, the economy is improving, inflation has fallen to a record low and monetary policy is firmly in the hands of competent technocrats. Hard-nosed central bank governor Elvira Nabiullina has scored an A grade for three consecutive years, mainly for driving once-high inflation to a record low. Another key achievement: cleaning up a disastrous private banking sector and recapitalizing a trio of key failed lenders.

As a former serial bond defaulter with a volatile currency, Russia doesn’t have much appeal to conservative bond investors. But with domestic consumption and investment on the rise, state-owned heavyweight Sberbank offers a way to play the economy while taking advantage of the restructured banking sector. One risk: proposed stronger U.S. sanctions on Russian bank transactions abroad, which has already led Sberbank to cut back foreign expansion.


Having a stable currency and one of the world’s top-rated central bankers doesn’t ensure you will be able to attract the foreign capital needed to boost a struggling economy, particularly when you have volatile neighbours and a debt-to-GDP ratio in excess of 150 per cent.

Looking for anything that could give its economy a shot in the arm, the government turned to McKinsey & Co. for help. Its advice included creating the sort of investment banking hub that once made Beirut a major finance centre. It also recommended legalizing and marketing medical marijuana, to take advantage of a uniquely potent local plant strain and skyrocketing global demand.

If the idea manages to win the approval of a skeptical cabinet − and overcomes the resistance of religious leaders and the armed clans that control the illegal product − it offers yet another opportunity for the increasingly global cannabis investing crowd.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error Editorial code of conduct
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to If you want to write a letter to the editor, please forward to

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies