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Thursday, 11 March 2021

What the markets are doing on 11 March 2021

Resource-based emerging markets usually get a big boost in a commodities supercycle, but it’s a bit more complicated this time around, Reuters says. In a supercycle, EM usually find higher demand for their wares, whether that’s agricultural output from Argentina and Egypt, minerals and ores out of Brazil, or metallurgical and other products from Egypt and the GCC. That usually gives a nice boost to EM currencies, but Reuters argues that this time around, the currencies of developed market commodities players such as Australia and Canada are going to outperform their EM competitors.

What gives? EM currencies are under pressure as US treasury yields rise — and Reuters suggests that “a mix of slower vaccination rollouts, fading growth prospects, rising debt burdens and geopolitical tensions” will continue to put pressure on select EM currencies, muting the bump they get from the supercycle.

How is the commodities boom affecting Egypt? Businesses in the metals and fertilizers industries in Egypt (of which Egypt is a net exporter) stand to gain, analysts told us last week. Muted demand for foodstuffs should keep Egypt shielded from a supercycle-induced rise in inflation, they said.

The news comes as developed countries’ economic recoveries appear to be slowing in March, reversing a boom in market activity in February, according to Bloomberg economic indicators. The exception is Spain, whose recovery has continued to accelerate.

Chinese stocks have fallen 14% from record highs over the past two weeks, wiping out some USD 1.3 tn and slashing the value of retail holdings, Bloomberg reports. Attempts by state-backed funds to quell a Tuesday sell-off by buying shares only briefly steadied markets, reversing a 3.2% drop in China’s benchmark CSI 300 index to a 0.3% gain, before closing at a 2.2% slump at the end of trading. Analysts say state-backed purchases could ramp up to prevent the rut from turning into a full blown selling panic.

Down

EGX30

11,236

-0.9% (YTD: +3.6%)

None

USD (CBE)

Buy 15.68

Sell 15.78

None

USD at CIB

Buy 15.68

Sell 15.78

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

9,596

+1.3% (YTD: +10.4%)

Up

ADX

5,607

+0.4% (YTD: +11.1%)

Up

DFM

2,547

+0.3% (YTD: +2.2%)

Up

S&P 500

3,899

+0.6% (YTD: +3.8%)

Down

FTSE 100

6,726

-0.1% (YTD: +4.1%)

Up

Brent crude

USD 68.38

+0.7%

Down

Natural gas (Nymex)

USD 2.68

-0.3%

Up

Gold

USD 1,727.40

+0.3%

Up

BTC

USD 56,107.99

+3.7%

The EGX30 fell 0.9% yesterday on turnover of EGP 1.5 bn (1.6% above the 90-day average), the second day in a row it has closed in the red. Foreign investors were net sellers. The index is up 3.6% YTD.

In the green: Orascom Investment (+4.9%), CI Capital (+1.3%) and Sidi Kerir (+1.3%).

In the red: Ezz Steel (-2.5%), Fawry (-2.5%) and Heliopolis Housing (-2.1%).

It’s shaping up to be a great day for Asian shares and futures suggest shares in Europe, on Wall Street and in Toronto will all open in the green later today.

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