A rosy performance on emerging-market assets should be tempered with caution: Emerging-market assets are on track for their best month of the year in November on the back of optimism over an end to the Fed’s monetary tightening and cooling US-China geopolitical tensions after a landmark meeting between presidents Biden and Xi Jinping this month, Bloomberg reports. However, several factors could pose as stumbling blocks to the upwards trend of the asset class.

Where we stand: EM bonds are currently enjoying their best month of the year, having risen 4.3% so far in November. Meanwhile, stocks and currencies have both recorded their strongest monthly gains since January, up 7.4% and 2.4% respectively.

  • The Fed’s next move is the biggest risk ahead: A hawkish decision from the Fed at its next meeting on 12-13 December could place pressure on EM assets. Traders are currently banking on a dovish outcome in light of softening inflationary data, though the Fed has emphasized its readiness for further restraint if needed.
  • Upcoming elections are also key: Elections in crucial markets such as Taiwan and India, Indonesia and Egypt could spell out higher government spending in the event of populist wins. Taiwan, whose Democratic People’s Party rejects detente with China, could especially put a strain on EM assets.
  • Developments in Argentina and Chile likewise pose a threat: Javier Milei, Argentina’s newly-elected radical libertarian president, could face an upward battle wrestling with the country’s Argentina’s economic crisis, one analyst said. Chile, meanwhile, is caught in a stilted process to reform the constitution, which will likely cause protests and market volatility.

EGX30

25,300

-0.9% (YTD: +73.3%)

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

11,090

+0.1% (YTD: +5.8%)

ADX

9,555

+0.2% (YTD: -6.4%)

DFM

3,992

+0.2% (YTD: +19.7%)

S&P 500

4,559

+0.1% (YTD: +18.8%)

FTSE 100

7,448

+0.1% (YTD: +0.5%)

Euro Stoxx 50

4,372

+0.3% (YTD: +15.3%)

Brent crude

USD 80.58

-1.0%

Natural gas (Nymex)

USD 2.86

-1.5%

Gold

USD 2,023.50

+0.5%

BTC

USD 37,406

-1.0% (YTD: +128.3%)

THE CLOSING BELL-

The EGX30 fell 0.9% at yesterday’s close on turnover of EGP 3.66 bn (30.6% above the 90-day average). Regional investors were net sellers. The index is up 73.3% YTD.

In the green: Abu Dhabi Islamic Bank (+3.9%), Qalaa Holding (+2.7%) and Oriental Weavers (+2.6%).

In the red: Mopco (-3.4%), CIRA Education (-3.1%) and Fawry (-3.0%).

Asian markets are firmly in the red this morning, and shares in the US and Europe look set to follow them, according to equity futures.

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