We may see more caution in early 2021 valuations of emerging market stocks, bonds and currencies amid uneven covid-19 recovery rates in developing economies and suggestions of MSCI exuberance, Bloomberg reports. But with central bank stimulus and vaccines on the horizon, overall investor sentiment remains buoyant, say analysts. EM stocks ended 2020 at their highest level in 13 years, currencies neared their 2018 record, and local-currency bonds had their best quarter in over a decade, with over USD 17 tn of negative-yielding debt worldwide.

EM hard-currency bond sales will see a further boost in 2021: Over USD 757 bn in USD and EUR-denominated bonds was sold by EM governments and companies in 2020 — the most in over two decades — and this will continue over the next 12 months, driven by heavy government borrowing to fund covid-19 healthcare and poverty relief measures, and stimulate economic growth. Financing conditions are expected to support investment grade and high yield, say Goldman Sachs strategists. Companies will also borrow to capitalize on growth, and loose monetary policy will afford them much-needed liquidity, Bloomberg predicts.

Egypt has already approached banks for a USD 7 bn Eurobond sale in 1H 2021 — one of several major agreements flagged for the year.

US facing delayed economic recovery: Economic growth in the US is expected to slow in the opening months of 2021 before picking up later in the year, as spending increases thanks to the USD 900 bn pandemic-relief package, higher rates of personal saving and the vaccine rollout, the Wall Street Journal says. US GDP is expected to grow 5.8% in 2021 after a 3.5% contraction in 2020, according to Goldman Sachs, while Moody’s predicts 4.2% growth.

The EGX30 was flat at the end of yesterday’s session on low turnover of EGP 874 mn (34.5% below the 90-day average). Local investors were net buyers. The index is flat YTD.

In the green: Egyptian Iron & Steel (+8.3%), GB Auto (+5.7%) and Palm Hills (+2.9%).

In the red: Cleopatra Hospital (-2.7%), Export Development Bank (-2.2%) and CIRA (-1.8%).

Asian markets are in the green in early trading this morning while futures suggest that European markets will open in the red and US stocks will rise when the markets open later today.