The third quarter wasn’t kind to EM equities: Emerging-market stocks took a serious blow in 3Q 2023, with a deepening sell-off wiping out an estimated USD 688 bn of value in September alone, according to data compiled by Bloomberg. The rout took total EM equity losses in August and September to USD 1.54 tn, erasing almost all of yearly gains and leaving the asset class nursing its heaviest quarterly losses in a year.

Driving the bloodbath: Some of the most profitable trades in the EM space have gone into reverse on the back of a stronger USD, aggressive Fed policy and China’s economic woes. “It was already a pretty painful eight, nine months,” one fund manager told the news outlet. “But, really, the confirmation by the Fed and further appreciation by the market that rates will probably stay for long is really causing some volatility. The past few days have been specifically painful.”

On the upside: EM equities could be at an attractive entry point for those with patience to adopt a buy-and-hold strategy, another analyst said. “Global leaders are ending their hawkish campaigns, or at least those endings are in sight. It is reasonable to believe that emerging markets as it is priced today, will be higher a year from now.”

ALSO- Saudi Arabia will return to international debt markets in the upcoming fiscal year to plug a projected budget deficit, the Finance Ministry said in its pre-budget statement. Riyadh had initially expected to report a surplus for 2023, but now expects a budget deficit of 2% of GDP due largely to lower oil prices and to its decision to extend oil production cuts. The statement did not specify how much Saudi Arabia plans to borrow during the year. (Reuters | Saudi Press Agency)

EGX30

19,901

-0.8% (YTD: +36.3%)

USD (CBE)

Buy 30.83

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

19.25% deposit

20.25% lending

Tadawul

11,006

-0.3% (YTD: +5.0%)

ADX

9,788

0.0% (YTD: -4.2%)

DFM

4,183

+0.5% (YTD: +25.4%)

S&P 500

4,138

-0.9% (YTD: +9.1%)

FTSE 100

7,511

-1.3% (YTD: +0.8%)

Euro Stoxx 50

4,138

-0.9% (YTD: +9.1%)

Brent crude

USD 90.45

-1.9%

Natural gas (Nymex)

USD 2.85

-2.8%

Gold

USD 1,844.20

-1.2%

BTC

USD 27,848

+2.7% (YTD: +68.7%)

THE CLOSING BELL-

The EGX30 fell 0.8% at yesterday’s close on turnover of EGP 3.3 bn (53.2% above the 90-day average). Local investors were net sellers. The index is up 36.3% YTD.

In the green: EFG Holding (+3.2%), Heliopolis Housing (+2.8%) and Oriental Weavers (+2.2%).

In the red: Orascom Construction (-8.3%), Fawry (-3.5%) and Credit Agricole (-3.3%).

Asian markets are mostly in the red during early trading this morning as concerns about tightening financial conditions continue to stoke nerves in the market following yesterday’s sell off in the US bond market. The Hang Seng (-3.0%) and the Nikkei (-1.6%) are heavily selling off, while shares in Australia are down 1.3%. Shares on Wall Street and in Europe look set to follow them later today, with equity futures all in the red this morning.

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