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Vaccine Hopes, Biden Transition Boosted Risk Appetite: EM Review

(Bloomberg) — Emerging-market stocks and currencies are heading for their fourth week of gains amid optimism over vaccine developments and a formal start of President-elect Joe Biden’s transition to power. Central banks in South Korea, Nigeria and Sri Lanka held rates steady.



Pipettes are seen at the Moderna Therapeutics Inc. lab in Cambridge, Massachusetts, U.S., on Tuesday, Nov. 14, 2017. Moderna this week started testing a personalized treatment that teaches the body how to fight cancer.


© Photographer: Bloomberg/Bloomberg
Pipettes are seen at the Moderna Therapeutics Inc. lab in Cambridge, Massachusetts, U.S., on Tuesday, Nov. 14, 2017. Moderna this week started testing a personalized treatment that teaches the body how to fight cancer.

The following is a roundup of emerging-market news and highlights for the week through Nov. 27:

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Highlights:

Leaders of the world’s richest countries promised to ensure equality in the race to vaccinate people against the coronavirus, even as President Donald Trump stayed quiet on sharing U.S.-made vaccines with other nationsA leading Chinese vaccine developer has applied for authorization to bring its Covid-19 shot to the market, seeking to get a jump on Western rivals as the race for a working inoculation against the virus enters the final stretchAstraZeneca Plc’s Covid-19 vaccine looks like it’s headed for an additional global trial as the drugmaker tries to clear up uncertainty and confusion surrounding favorable results in its current studyBiden said his transition team will not be “so far behind the curve” now that the Trump administration has begun cooperating on the fight against the coronavirus and providing access to intelligence reports after a three-week delayBiden plans to nominate former Federal Reserve Chair Janet Yellen to serve as his Treasury secretary, people familiar with the matter said, choosing the first woman and a seasoned central banker for the nation’s top economic policy job as the coronavirus pandemic threatens another U.S. downturn

China’s President Xi Jinping broke his silence on Biden’s election victory, sending the U.S. president-elect a message that he hopes to “manage differences” and focus on cooperation between the world’s two largest economies

The Trump administration is close to issuing a list of 89 Chinese aerospace and other companies that would be unable to access U.S. technology exports due to their military ties, Reuters reportedChina’s imports of U.S. goods under the phase-one trade deal slowed last month after hitting a high in September, leaving the full-year target well out of reachBank of Korea Governor Lee Ju-yeol said the economy is expected to shrink less this year despite a resurgence of the coronavirus, while issuing a warning over rapid won gains that could undermine the recovery; the central bank board kept its key rate steady on Thursday and upgraded its growth forecastsTurkey took a further step toward mainstream economic management by abolishing a rule that compelled lenders to extend credit and buy government debt

Asset moves as of 3:52 p.m. in SingaporeWeekly
MSCI EM stocks index +1.8%
MSCI EM FX index +0.2%
Bloomberg Barclays global EM local currency bond index (up to Thursday) +0.4%

Asia:

Foreign investors are piling money into major Asian equity markets outside of China at the fastest pace in seven years this quarterThe International Monetary Fund’s October acknowledgment of the case for temporary debt monetization in Asia marked yet another example of how the pandemic has upended economic orthodoxy

China’s economic recovery stabilized in November, underpinned by solid global demand for exports ahead of the Christmas period and the stock market’s gain to its highest since 2015

China confirmed it’s compiling a global watch list of Taiwanese independence backers it plans to “punish”Hong Kong Chief Executive Carrie Lam defended Beijing’s sweeping actions to exert greater political control over Hong Kong while outlining steps aimed at interlocking the two economies; she also said Hong Kong will expand the scope of the China stock connect programChina is very likely to exit from some of its stimulus measures as the economy improves, a leading state newspaper said on its front page Thursday; the central bank said it will maintain normal monetary policy for as long as possibleThe foreign ministers of China and Japan agreed at a meeting in Tokyo to lift some virus-related travel restrictions by the end of the monthChina will likely return to a more “proper” range of economic development next year, Premier Li Keqiang saidThe U.K. is considering a ban on the installation of Huawei Technologies Co. 5G equipment as soon as next year to appease hawks pushing for tighter restrictions on the Chinese network equipment makerChina is set to impose anti-dumping duties of more than 100% on Australian wine from this weekend, adding to a series of sweeping trade reprisals this year and further escalating tensions with CanberraSouth Korea’s stocks hit a record high as improving trade data and the earnings outlook boosted investor confidence; early trade data showed exports extending their recovery in NovemberHousehold debt rose 2.7% to 1,682.1 trillion won in the third quarter, the fastest pace since 2016The nation’s exporters see the won as too strong and cited currency volatility as one of their key concerns for next year, according to a trade group surveyIndia stocks rose to a fresh record as foreign net buying was also set for a monthly recordIndia’s key manufacturing exports may lose market share to a China-backed Asian trade blocIndian banks are making fresh loans at the slowest pace in at least three years

Video: Analyst says China’s central bank could intervene after state-firm bond defaults (CNBC)

Analyst says China’s central bank could intervene after state-firm bond defaults

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Concern about the depth of India’s recession is slowly being replaced by optimism that a recovery is taking holdIndonesia is planning to shorten the duration of the year-end holiday to avoid mass gatherings suspected of triggering a recent spike in casesThe country’s lenders are pushing back against central-bank pressure to further lower interest rates for their customersIndonesia’s central bank will stay focused on supporting economic growth, even as inflation is expected to remain low due to weak demand, Governor Perry Warjiyo saidIndonesia’s tax collections from the production sectors are still “under deep pressure” amid the pandemic, Finance Minister Sri Mulyani Indrawati saidThailand’s trade indicators show a gradual recovery in many areas, according to the Commerce Ministry’s Trade Policy and Strategy Office; exports fell more than expected in OctoberThousands of pro-democracy protesters in Thailand gathered outside the main office of the nation’s most valuable lender, in which King Maha Vajiralongkorn is the biggest shareholder, as they push for more transparency and accountability from the monarchyThailand’s manufacturing production fell 0.54% year-on-year in October, less than economists’ forecastThailand must check the gains in its currency as it makes it harder for exporters to compete in the global market, according to the nation’s largest industry group

Economists have slashed their 2020 outlook for the Philippines by more than any other Southeast Asian nation as it struggles with one of the region’s worst coronavirus outbreaks

The Philippine government can further loosen movement curbs before year-end to support a recovery from recessionBudget deficit was 61.4 billion pesos ($1.3 billion) in October, according to the Bureau of the TreasuryThe Philippines plans to offer total 120 billion pesos of treasury bills and bonds in December, Bureau of the Treasury says in memorandum to dealers

Malaysia Prime Minister Muhyiddin Yassin survived a key test of his leadership on Thursday when he won enough support in parliament for his 2021 budget

October consumer prices fell 1.5% from a year earlier, the Department of StatisticsPalm oil exports fell by 18.66% m/m during Nov. 1-25, according to Intertek Testing ServicesExports rose 0.2% in October; median estimate was for a 0.4% declineA senior U.S. military officer who oversees intelligence gathering for the Indo-Pacific Command made an unannounced visit to Taiwan, Reuters reportedU.S. National Security Adviser Robert O’Brien told Vietnamese leaders they must curb illegal re-routing of Chinese exports and purchase more U.S. goods such as liquefied natural gas and military equipment in order to avoid punitive American tariffsSri Lanka’s central bank kept borrowing costs unchanged for a third straight meeting, counting on fiscal measures to provide stimulus to an economy at risk from a new wave of Covid-19 infections

EMEA:

Turkey’s central bank raised the amount of lira and FX deposits that commercial lenders must park at the monetary authority, according to a decree published in the Official GazetteThe country is lengthening its bond maturities on foreign and local markets as it seizes on investor optimism after President Recep Tayyip Erdogan’s economic revamp earlier this monthEuropean Union foreign-policy chief Josep Borrell highlighted the possibility of tougher EU sanctions against Turkey over its activities in the eastern Mediterranean, saying the bloc’s leaders will tackle the matter at a Dec. 10-11 meetingTurkey’s new economic managers are racing to reverse the interventionist policies spearheaded by President Recep Tayyip Erdogan’s son-in-law, but their market-friendly U-turn could initially mean more volatility for the liraThe leaders of Poland and Hungary, who effectively vetoed the European Union’s $2 trillion spending package last week, are meeting as pressure builds on them to relent on their opposition to tying funding to upholding the rule of lawSerbia is making a rare trip to the dollar bond market, raising 10-year debt to partly redeem its last outstanding notes in the currency due within a yearRomania returned to international debt markets, with its fourth publicly syndicated transaction this year, as the country seeks to fund next year’s spending just before a crucial ratings decision and a general election

South African inflation unexpectedly accelerated in October to the highest rate in seven months, driven by food, non-alcoholic beverages, housing and utilities

The nation’s business confidence jumped to the highest level in more than two years in the fourth quarter as further easing of lockdown restrictions spurred a resurgence in activity but economic risks could weigh on sentiment in the new yearThe Public Investment Corp., Africa’s biggest fund manager, is willing to help South African power utility Eskom Holdings SOC Ltd. resolve its debt crisis, Finance Minister Tito Mboweni said at the Bloomberg Capital Markets Focus virtual event TuesdayStronger African economies don’t need debt relief from bondholders, whose money will be crucial to help finance the recovery of the continent, according to Senegal Economy and Planning Minister Amadou Hott

Nigeria’s central bank held its benchmark interest rate to allow previous cuts to flow through the economy, saying Africa’s largest economy should exit its recession by the end of this year

The nation’s official exchange rate should not be determined by the parallel market where the naira value has weakened to a three-month lowAfrica’s stocks and bonds are starting to win over investors scouring some of the developing world’s most beaten-down markets for returnsA major battle for control of Ethiopia’s Tigray state capital appears imminent and fears are mounting that numerous civilians who are unable to escape the fighting could be caught in the crossfireZambian inflation quickened for the third straight month in November to a four-year high propelled by food and non-food itemsDubai’s government raised $1.5 billion by reopening existing debt instruments, data compiled by Bloomberg showThe United Arab Emirates abolished the need for companies to have Emirati shareholders, local media reported, in a major shake-up of foreign ownership laws aimed at attracting investment into an economy reeling from the coronavirus and a decline in oil pricesOman, one of the weakest sovereigns in the Gulf Arab region, returned to the dollar debt market as a rally in its bonds that were issued about a month ago enabled it to lock in cheaper ratesSaudi Arabia denied reports about a meeting between Crown Prince Mohammed Bin Salman and Israeli officials during a visit by the U.S. Secretary of State Michael Pompeo to the kingdomIsrael’s government instructed the military to prepare for a possible U.S. strike against Iran during the remainder of President Donald Trump’s term, Axios reported, citing unidentified Israeli officialsLebanon’s President Michel Aoun said a forensic audit at the nation’s central bank has become a requirement for talks with the International Monetary Fund, days after an audit firm hired to do so quit over lack of dataKenya’s central bank held its key interest rate for the fifth straight meeting as the impact of the coronavirus pandemic in East Africa’s largest economy started easing in the second half of the year

Latin America:

Brazil’s annual inflation accelerated to 4.22% in mid-November, abov ethe official target, amid higher prices of food and transportationEconomists raised their forecasts for both inflation and the key interest rate next yearCentral bank president Roberto Campos Neto said policymakers are relatively comfortable with inflationHours after Campos Neto spoke out about Brazil’s budget challenges, Economy Minister Paulo Guedes said his colleague is aware of the government’s plan to boost fiscal credibility and that he should speak up if he has any better ideasBrazil may sell external bonds before the end of the year, the Treasury saidSao Paulo state is considering whether to reimpose more severe restrictions on the movement of people amid the Covid-19 pandemicMexico’s economy leaped 12.1% in the third quarter from the previous three months, the fastest pace in at least three decades amid a surge in manufacturingAnnual inflation slowed to 3.43% in mid-November, less than expected by all analysts in a Bloomberg survey, and below the ceiling of the target rangeCentral bank expects economy to shrink 8.9% this year versus its prior forecasts of between 8.8% and 12.8%Mexico may not be done cutting interest rates, according to two members of the central bank board

Argentina’s Neuquen province reached a debt agreement with creditors, Governor Omar Gutierrez said

Economic activity increased 1.9% in September from August, in line with economists’ expectationsChile’s senate passed a government-backed bill allowing people to tap their pension savings for a second time, unleashing billions of dollars into the economy

Peru sold $4 billion of bonds, including securities coming due in 100 years, just days after nationwide protests in the wake of Martin Vizcarra’s impeachment

The century bonds were sold at the lowest yield for an emerging-market government everColombia’s government estimates the economy will rebound 11.8% in 2021, after an estimated contraction of 6.8% this year, Finance Minister Alberto Carrasquilla saidEcuador’s government is aiming to approve by mid-December an anti-corruption bill that is key to securing the disbursal of $2b by the IMFSuriname extended the expiration date of its consent solicitation, which seeks to delay payments on the nation’s 2023 and 2026 dollar bonds, until Dec. 4 at 5 p.m. ET

Upcoming data and economic releases:
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