Investors look to emerging markets for tariff-safe assets

Investors seek assets safe from US tariffs: As US President Donald Trump’s tariff agenda continues to loom large, investors are looking to emerging markets as an option to hedge their investments safely away from developed markets threatened with trade levies, Bloomberg reports. Countries non-reliant on trading with the US — and with strong domestic stories and benchmark indexes — are now seen as a safer investment.

Different economies offer various domestic market strongpoints. China’s recent AI market disruptor DeepSeek, which rattled US tech stock earlier this year, triggered an investment surge in domestic companies using homegrown AI software. Dubai’s foreign worker influx boosted its benchmark index to a record high in February, while Latin American countries like Brazil are stepping in as alternatives to trade originally coming from Mexico.

Stable emerging economies pegged to the greenback are especially attractive as they enjoy the security that comes with a strong USD peg without being exposed to any foreign exchange risk, the business news information service quotes Cheyne Capital’s Carl Tohme as saying. The UAE, Saudi Arabia and Qatar were identified as prime examples. Government backing in many of these markets also provides another layer of security, it said.

This has been going on for a while: January saw “an emerging market buying spree,” with portfolio flows to emerging markets hitting USD 35.4 bn — the majority of which came from debt flows, signaling “investor preference for the relative stability of fixed-income instruments amid persistent geopolitical uncertainty, US monetary policy risks, and global economic headwinds,” according to an Institute of International Finance report cited by Reuters earlier this year.

This comes in stark contrast to European markets which recently took a hit after Trump threatened a 25% levy on EU imports, targeting vehicles specifically, the Financial Times reported. Major auto manufacturing players including Volkswagen and Ferrari saw their stock fall by up to 7.9%.

However, this reorientated focus isn’t completely foolproof — emerging market assets saw a slump at the end of last month, an indication that even those assets are not immune to the impacts of a potential tariff escalation, Bloomberg said.

MARKETS THIS MORNING-

Asian markets are in the green this morning, with Japan’s Nikkei leading gains at 1.09%, and Hong Kong’s Hang Seng trailing closely with a 0.65% rise. South Korean markets are closed for a public holiday. Meanwhile, on Wall Street, futures are up slightly as investors await more clarity on the US’ tariff plans this week.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.6% yesterday on turnover of SAR 3.5 bn. The index had no change YTD.

In the green: Saudi Cable (+5.8%), Elm (+4.2%) and Avalon Pharma (+2.0%).

In the red: Sal (-10.0%), Batic (-9.8%) and Al Baha (-7.3%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.6% yesterday on turnover of SAR 29.7 mn. The index is up 0.3% YTD.

In the green: Gas (+13.5%), Dar Almarkabah (+12.3%) and Fad (+7.6%).

In the red: Nbm (-9.9%), Meyar (-9.2%) and Fadeco (-8.1%).

CORPORATE ACTIONS-

The owner and operator Burgerizzr, Shatirah House Restaurant’s BoD recommended a 60% capital increase by way of granting bonus shares to the company’s shareholders, it said in a filing to Tadawul. The move, pending required approvals, will see the burger chain operator tap its retained earnings to bring its total capital up to SAR 56 mn, from the current SAR 35 mn, in line with its growth plans. The bonus shares will be distributed at a 3-for-5 ratio, meaning shareholders will receive 3 additional shares for every 5 shares they currently hold.

Saudi Fisheries Company reduced its capital by 83.25% to SAR 67 mn from SAR 400 mn, eliminating the company’s accumulated losses, it said in a disclosure to Tadawul.

Unitholders of Albilad Saudi Sovereign Sukuk ETF will receive SAR 231.2k in dividends for February 2025 at 0.03 a piece, according to a disclosure to Tadawul. Unitholders registered by Wednesday, 5 March will be eligible, with payments to be made within 10 days.