Emerging market stocks are once again whetting the appetite of investors, with previously sidelined emerging market ETFs — exchange traded funds — seeing their fourth consecutive week of inflows, reports Bloomberg. Recent inflows pushed EM ETFs into the green YTD for the first time since April, with USD 1.8 bn worth of inflows pushing the collection of ETFs to a net positive of USD 880.4 mn

(Tap or click the headline above to read this story with all of the links to our background as well as external sources.)

“After years of being unloved and overlooked, EM equities are seeing significant demand as allocators step up their need for geographical diversification,” said Global X portfolio manager Malcom Dorson. Moody’s downgrading the US’ sovereign credit rating by one notch to AA1 has added “fuel to the fire, and we think this rally is sustainable,” he added.

Growing risk appetite drove the Avantis Emerging Markets Equity EFT to record inflows upwards of USD 1 bn last week — marking its best ever week and accounting for more than half of EM ETFs listed stateside.

But zooming into which EM assets have become the most attractive, China is the clear front runner, with inflows reaching USD 669.1 mn last week following a temporary trade war truce between the US and the world’s factory. With trade war concerns at bay — for now at least — traders are now pricing in a much lower possibility of a coming global recession, which is good news for emerging market stocks.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning. The Shanghai Composite is up 0.1%, the Hang Seng and Kospi are both in the green, looking at gains of 0.4% and 0.7%, respectively. Meanwhile, Japan’s Nikkei is down 0.2%.

EGX30

31,629

+0.9% (YTD: +6.4%)

USD (CBE)

Buy 49.83

Sell 49.96

USD (CIB)

Buy 49.86

Sell 49.96

Interest rates (CBE)

25.00% deposit

26.00% lending

Tadawul

11,438

+0.3% (YTD: -5.0%)

ADX

9,707

+0.4% (YTD: +3.1%)

DFM

5,467

-0.4% (YTD: +6.0%)

S&P 500

5,940

-0.4% (YTD: +1.0%)

FTSE 100

8,781

+0.9% (YTD: +7.4%)

Euro Stoxx 50

5,455

+0.5% (YTD: +11.4%)

Brent crude

USD 65.38

-0.2%

Natural gas (Nymex)

USD 3.43

+0.1%

Gold

USD 3,307

+0.7%

BTC

USD 106,085

+0.5% (YTD: +13.4%)

S&P Egypt Sovereign Bond Index

867.5

-0.1% (YTD: +11.6%)

S&P MENA Bond & Sukuk

143.0

-0.2% (YTD: +2.2%)

VIX (Volatility Index)

18.09

-0.3% (YTD: +4.3%)

THE CLOSING BELL-

The EGX30 rose 0.9% at yesterday’s close on turnover of EGP 3.8 bn ( 17.6% below the 90-day average). Local investors were the sole net buyers. The index is up 6.4% YTD.

In the green: Beltone Holding (+8.1%), Fawry (+7.8%), and Ibnsina Pharma (+6.3%).

In the red: Egypt Kuwait Holding -EGP (-3.0%), Eastern Company (-2.9%), and Mopco (-1.0%).

CORPORATE ACTIONS-

#1- SODIC to consolidate seven subsidiaries: SODIC received the green light from the General Authority for Investment and Freezones to absorb seven of its subsidiaries, it said in an EGX disclosure (pdf). The merged entities include Sodic for Development and Real Estate Investment, Sodic Polygon, Soreal for Real Estate Investment, Sixth of October for Development and Real Estate Projects Company (SOREAL), Tabrouk Development, La Maison, and Al Yosr.

#2- United Bank will distribute a dividend of EGP 0.75 per share on its 2024 earnings, according to an EGX disclosure (pdf). The dividend will be doled out to eligible shareholders on 18 June.

#3- ADIB Egypt wants to double its authorized capital to EGP 20 bn and its issued and paid-up capital to EGP 12 bn from EGP 6 bn. The move awaits the green light from the EGX’s listing committee.

Tags: