Sovereign credit ratings in the emerging markets are back on the up on the bank of hoped-for rate cuts, post-Covid recovery, and policy moves in select markets, Reuters reports. The newswire points to Turkey, Brazil, Nigeria, Zambia and also us here in Egypt as adding to the growing evidence that there’s a turnaround in ratings after decades of downgrades.

Economies are in a very different place than they were during the pandemic: Three-quarters of sovereign credit rating movements in 2024 have been in a positive direction, while almost all were negative when we were all working from home during the pandemic, according to data from the Bank of America cited by Reuters.

The why: It varies by economy, Fitch Ratings’ Ed Parker told the newswire. Some economies have benefited from a recovery following the pandemic and energy price spikes from Russia’s invasion of Ukraine, while others have had a change of fortunes on the back of policy improvements, and frontier economies are reaping the rewards of their new-found access to debt markets, he added.

Remember: Egypt has had Moody’s, Fitch Ratings, and S&P Global Ratings upgrade its sovereign credit outlook to positive since March 2024 — though none of the “big three” have upgraded Egypt’s credit rating itself.

Good news for sure, but EMs still have a long way to go: Ratings upgrades and better access to debt markets are obviously a positive sign, especially after a long period of high interest rates and a strong USD. But getting too excited about the ratings upgrades risks ignoring long-term trends in developing countries’ debt markets.

MARKETS THIS MORNING-

Major Asian benchmarks slumped into the red this morning after the minutes of the US Fed’s latest meeting were released. Traders and bankers alike are concerned that the central bank is getting “cold feet on possible rate cuts” after data showed inflation was surprisingly stubborn. Of the big Asian indexes, only the Nikkei is in positive territory this morning.

Looking ahead: Nasdaq and S&P futures were up overnight after Nvidia reported record earnings — but futures have the Dow headed for a lower open at the start of trading today. European futures declined overnight.

EGX30

27,227

0.0% (YTD: +9.4%)

USD (CBE)

Buy 46.74

Sell 46.88

USD (CIB)

Buy 46.74

Sell 46.84

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,157

+0.3% (YTD: +1.6%)

ADX

8,973

-0.4% (YTD: -6.3%)

DFM

4,058

-0.4% (YTD: -0.1%)

S&P 500

5,307

-0.3% (YTD: +11.3%)

FTSE 100

8,370

-0.6% (YTD: +9.7%)

Euro Stoxx 50

5,025

-0.4% (YTD: +11.1%)

Brent crude

USD 81.90

-1.2%

Natural gas (Nymex)

USD 2.84

+6.4%

Gold

USD 2,4116

-1.4%

BTC

USD 69,423

-0.5% (YTD: +64.4%)

THE CLOSING BELL-

The EGX30 remained flat at yesterday’s close on turnover of EGP 4.0 bn (17.3% below the 90-day average). International investors were net sellers. The index is up 9.4% YTD.

In the green: Edita (+7.0%), Orascom Development Egypt (+6.5%), and Heliopolis Housing (+4.2%).

In the red: Abu Qir Fertilizers (-2.9%), Mopco (-2.3%), and AMOC (-2.2%).

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