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Sunday, 20 December 2020

What the markets are doing on 20 December 2020

Inflows into emerging markets in 4Q2020 have boomed at the fastest rate in seven years, the Financial Times reports, citing data from the Institute of International Finance. Foreign inflows reached USD 145 bn in November alone, while USD 37 bn has gone into bonds and USD 40 bn into equities over the past month. It marks a sharp reversal of the capital flight from EMs earlier this year, when outflows reached USD 243 bn during the first four months of the pandemic.

But what happens next year is anyone’s guess: While some analysts expect the trend to continue well into next year, with 2021 becoming a “breakout year” for emerging markets, others warn that the rally driven by excess cash in search of investments — and the expectation that the pandemic’s end could be within view — will invariably lose momentum. Strategists from HSBC and Societe Generale are cautioning investors not to be swept up by the bullish crowd across emerging markets, arguing that stocks are overvalued and pointing out the mounting piles of debt, uncertainties over vaccine distribution, and the potential for uneven economic recoveries, Bloomberg reports.

Good news for emerging markets? The USD is nearing six-year lows after the US Fed vowed to maintain easy monetary policy and leave in place its large bond-buying program brought in in response to covid-19, reports Axios. Reminder: A weaker greenback reduces debt servicing costs for emerging markets and provides EM policymakers with more room for stimulus without the fear of inflationary shocks.

The US drone market just got scrambled after the Trump administration slapped sanctions on Mavic-maker DJI as part of a wider move against Chinese tech companies.

Down

EGX30

10,845

-1.3% (YTD: -22.3%)

Up

USD (CBE)

Buy 15.66

Sell 15.76

Up

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

8,712

-0.1% (YTD: -3.8%)

Down

ADX

5,135

-0.4% (YTD: +1.2%)

Up

DFM

2,550

+0.4% (YTD: -7.8%)

Down

S&P 500

3,709

-0.4% (YTD: +14.8%)

Down

FTSE 100

6,529

-0.3% (YTD: -13.4%)

Up

Brent crude

USD 52.26

+1.5%

Up

Natural gas (Nymex)

USD 2.70

+2.4%

Down

Gold

USD 1,888.90

-0.1%

Up

BTC

USD 23,938.24

+4.1%

The EGX30 fell 1.3% on Thursday on turnover of EGP 1.4 bn (2.8% above the 90-day average). Foreign investors were net sellers. The index is down 22.3% YTD.

In the green: Ezz Steel (+5.1%), Cleopatra Hospital (+2.2%) and Sidi Kerir Petrochemicals (+1.6%).

In the red: Juhayna (-3.4%), Pioneers Holding (-3.3%) and CIB (-2.1%).

Also worth knowing:

  • OPEC+ will now meet monthly instead of bi-annually to enable the group to react faster to changes in the oil market, with the next meeting slated for 4 January to decide whether to maintain production cuts, Bloomberg reports.
  • Tesla’s shares closed the week with a 6% surge off the back of its imminent inclusion in the S&P 500 index, meaning Tesla shares are now up 730% YTD, the Financial Times reports.

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