(Bloomberg) – Emerging market bargain buyers are in celebration mode. And the party is not over yet.
Joe Biden’s prospects for a presidency examined by a divided Congress have made everyone from Eaton Vance Corp. Medley Global Advisors predicts a new surge for risky assets, just a week after developing nations’ stocks, currencies and bonds hit thresholds as the US election approaches. BlackRock Inc. developing nations’ wealth, which looks more attractive in this low-rate world, could benefit from a more dovish leader in the White House, said the report. According to UBS Global Wealth Management, the Biden administration̵7;s policy approach is likely to reduce uncertainty.
Emerging market margins will support the notion that election results are likely to limit US interest rates longer and weaken the dollar, raising debt and currencies of developing nations as they struggled to fund efforts to prevent the worst of the Covid-19 pandemic.
Developing nations’ stock and currency gauges hit a two-year high on Friday, after being knocked out last month by uncertainty over US election results. The local bond has the best weekly performance since April for five days through Friday. The Mexican peso and the overseas yuan rose due to the prospect of reducing trade tensions.
Eric Stein, Investment Director for Fixed Income at Eaton Vance, said: “A Biden’s presidency with the Republican Senate could be the best possible scenario for a wealth of emerging markets and if the results are correct it will provide a very solid backdrop for this asset class. in Boston. “Biden should take a less confrontational approach with China and other countries than Trump.”
Asian markets are likely to outperform emerging markets as regional coronavirus pandemic control helps economies recover faster than other regions of the world, where the outbreaks occur. Strict closings are back. China’s October exports unexpectedly accelerated, and inflation and credit reports due this week may signal a steady base demand.
Nick Stadtmiller, strategist at Medley Global Advisors in New York, said: “The flow data over the past few months show that investors’ EM asset purchases tend to be heavily skewed towards some Asian countries. . “Asian economies are expected to grow faster than other emerging markets next year and that growth gap has supported Asian markets.”
However, there are some fragility points to worry about. Turkey remains on a trader’s watch list after President Recep Tayyip Erdogan sacked the country’s central bank governor for a series of rate hikes that failed to stop the lira’s slide. record low. Zambia could become Africa’s first sovereign default investor since the outbreak of the pandemic, if investors refuse a request to delay interest payments on $ 3 billion Eurobonds. in April.
In Latin America, Mexico and Peru will decide on interest rates, while an International Monetary Fund delegation will go to Argentina to negotiate with authorities on a new program.
The lira, the worst performing emerging-market currency of 2020, is likely to remain volatile after Erdogan appoints former Finance Minister Naci Agbal to replace Murat Uysal as central bank governor
The move is unlikely to change current trends in inflation, reserves and lira – if they are not followed by significant changes in policy, according to Goldman Sachs Group Inc.
Economists Murat Unur and Clemens Grafe wrote in a report: “Only future monetary policy actions will show if the new appointment again implies a change in policy and, if any, towards “Come on,” economists Murat Unur and Clemens Grafe write in a report. on November 19
Mexico, Peru to decide
Mexico’s central bank will meet on Thursday and while many officials are expected to hold on to key rates, Bloomberg Economics is preparing for a 4% cut in Inflation figures for October, meanwhile. , may be marked as higher than a month earlier. September industrial production, which took place on Wednesday, is expected to mark a year-over-year recovery while remaining below pre-pandemic levels. The peso was among the best performers in developing markets last week. Thursday and repeat their plans to keep the conditions open, according to Bloomberg EconomicsCongress will vote on a proposed impeachment of President Martin Vizcarra on Monday. Most investors expect the move to fail just like last month’s attempt, but political uncertainty held back Peru’s penny last week.
Data and Events
China is to release CPI and PPI data on Tuesday. According to a Bloomberg survey, CPI may have fallen to 0.8% in October from 1.7% in the previous month. According to the Bloomberg Barclays Index, the Chinese economy is recovering from the pandemic but household spending may remain relatively weak. China’s municipal bonds have returned 6.6% this year in dollar terms, according to the Bloomberg Barclays Index, while the domestic yuan has risen more than 5%. The Philippines will report third-quarter GDP on Tuesday and Malaysia will release similar data on Friday. Both countries are expected to say that their economic slowdown has slowed down during this period even as cases of the Philippine Peso virus being the best performing Asian currency outside of China. this year, while Malaysia’s ringgit weakens. Taiwan is to release October trade data on Monday. Recovering exports and rising demand for technology products have driven the Taiwan dollar up more than 4% this year. India will report CPI figures on Thursday. Rapidly rising inflation has forced the Reserve Bank of India to hold on to it since it cut interest rates in May. October CPI is estimated at 7.1%, still above the RBI target of 2% to 6%. India’s municipal bonds are also expected to report trade statistics this week, India’s municipal bonds are among the best performing in Asia this year, even. when the rupee overtakes all the coins in the area. 2011, with the de facto leader Aung San Suu Kyi and her ruling National League for Democracy expected to win another term The country’s Kyat has risen about 11% against the dollar. this year, according to data compiled by Bloomberg. to be released on Wednesday, will be watched for signs of how lower emergency aid transfers can affect consumer habits. According to economists surveyed by Bloomberg, investors will watch for signs of more orthodox economic measures from Argentina as the country tries to strengthen investor confidence and attract capital. Re-country after An IMF mission will arrive in Buenos Aires on Tuesday Some figures on October inflation are likely to show a growth in the country’s Central Bank last week improved forecasts for increases. Growth in 2020 was faster than expected in the third quarter. The Colombian peso was one of the best performers in emerging markets last week
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