Last month’s banking crisis didn’t do any favors for distressed EMs: More than a quarter of EMs are now unable to raise money via the international capital markets as investors shun risky assets amid the recent banking turmoil, the Financial Times reports, citing data by Goldman Sachs. Risk-off sentiment following the collapse of three US banks and Credit Suisse has driven up the spreads between the yields on EM bonds and US treasuries to more than 9 percentage points — the threshold at which market access typically becomes restricted.

Emerging-market local currency debt saw a solid 1Q despite the banking turmoil, notching quarterly returns of 4.8% to outperform US 10-year Treasuries on expectations that a number of EMs are nearing the end of their monetary tightening policy, Reutersreports. “We prefer income in EM debt with central banks closer to turning to cuts than developed markets — even with potential currency risks,” said Jean Boivin, global head of research at BlackRock.

We get a special mention: Egyptian USD-denominated bonds offered some of the worst year-to-date returns during 1Q at a negative 10%, according to Reuters.

Also worth noting:

  • S&P has downgraded Turkey’s credit rating to negative from stable on the back of post-earthquake reconstruction costs, unchecked inflation, modest FX reserves, and central bank plans to compensate depositors for FX-related losses. (Bloomberg)
  • Pakistan’s inflation rose at a record pace to 35.4% in March on the back of higher taxes and energy prices. (Bloomberg)

EGX30

16,419

0.0% (YTD: +12.5%)

USD (CBE)

Buy 30.84

Sell 30.96

USD at CIB

Buy 30.85

Sell 30.95

Interest rates CBE

18.25% deposit

19.25% lending

Tadawul

10,590

+0.8% (YTD: +1.1%)

ADX

9,430

-0.5% (YTD: -7.7%)

DFM

3,407

-0.6% (YTD: +2.1%)

S&P 500

4,109

+1.4% (YTD: +7.0%)

FTSE 100

7,632

+0.2% (YTD: +2.4%)

Euro Stoxx 50

4,315

+0.7% (YTD: +13.7%)

Brent crude

USD 79.77

+0.6%

Natural gas (Nymex)

USD 2.22

+5.3%

Gold

USD 1,986.20

-0.6%

BTC

USD 28,532

-0.2% (YTD: +72.5%)

THE CLOSING BELL-

The EGX30 was flat at Thursday’s close on turnover of EGP 1.87 bn. Foreign investors were net sellers. The index is up 12.5% YTD.

In the green: Oriental Weavers (+4.1%), CIB (+2.2%) and Abu Qir Fertilizers (+1.5%).

In the red: Sidi Kerir Petrochemicals (-4.2%), AMOC (-3.5%) and Rameda Pharma (-2.9%).

Tags: