Back to the complete issue
Thursday, 2 September 2021

Is a golden era for EM equities around the corner?

Is a golden era for emerging market equities around the corner? Investors are banking on a rebound in EM stocks, with EM equity funds having seen USD 81 bn in inflows so far this year, despite market volatility caused by China’s regulatory crackdown on tech and education businesses last month, the Financial Times reports. “If concerns about the Delta variant moderate a little bit and we don’t get more significant anti-market interventions in China, I think there will be a reasonable rebound,” said one Goldman Sachs strategist. Though EM bonds have remained weak throughout the past year, Latin American government bonds and Asian equities are poised to benefit from rising global inflation, as investors turn to equities with a chance of outpacing price growth.

OPEC+ will continue with plans to hike output by 400k bpd next month, after members agreed in a virtual meeting yesterday to press ahead with plans to undo oil production cuts — imposed during covid-19 to protect prices from plummeting demand — as oil prices continue to recover, Bloomberg reports. The group had earlier this week revised upwards its demand forecast for 2022 to 4.2 mn bpd from 3.3 mn previously. OPEC+ had reached an agreement in July to gradually increase production through the end of 2022, extending the supply cuts to December 2022 instead of April. The group will next meet to consider oil supply on 4 October, according to Reuters.

Factory backlogs pile up: The pandemic has trampled on the delicate, interconnected web of supply-and-demand that is the global goods trade, Bloomberg reports. Repairing it is proving more difficult than thought: the rise of the delta variant in parts of Asia, raw materials and parts shortages, and low shipping capacity mean that orders are piling up at factories worldwide. Unfulfilled orders hit record highs in Europe in August, while manufacturing PMIs showed contraction in Indonesia, Vietnam, Thailand, Philippines and Malaysia, with slowdowns also expected in the US. Meanwhile, foreign buyers are stressed that they won’t be able to fill the shelves in time for the end-of-year holiday season.

China’s manufacturing activity contracted for the first time in over a year in August, according to the Chinese Caixin Manufacturing PMI, which slipped to 49.2 from 50.3 in July. The Financial Times attributed the decline to the country’s strict response to its recent covid-19 outbreak.

Up

EGX30

11283.70

+1.26% (YTD: +4.04%)

None

USD (CBE)

Buy 15.65

Sell 15.75

None

USD at CIB

Buy 15.65

Sell 15.75

None

Interest rates CBE

8.25% deposit

9.25% lending

Down

Tadawul

11,310.54

-0.1% (YTD: +30.16%)

Down

ADX

7,649.31

-0.5% (YTD: +51.61%)

Up

DFM

2,916.60

+0.5% (YTD: +17.04%)

Up

S&P 500

4,530.28

+0.2% (YTD: +20.61%)

Up

FTSE 100

7,149.84

+0.4% (YTD: +10.67%)

Down

Brent crude

USD 71.44

-0.27%

Up

Natural gas (Nymex)

USD 4.62

+5.6%

Down

Gold

USD 1,814.80

-0.2%

Up

BTC

USD 48,399.90

+2.8% (as of midnight)

THE CLOSING BELL-

The EGX30 rose 1.3% at yesterday’s close on turnover of EGP 1.5 bn (1% above the 90-day average). Local investors were net sellers. The index is up 4% YTD.

In the green: Pioneers Holding (+4.3%), Fawry (+3.4%) and Rameda (+2.8%).

In the red: Heliopolis Housing (-0.9%), Raya (-0.7%) and Mopco (-0.7%).

Enterprise is a daily publication of Enterprise Ventures LLC, an Egyptian limited liability company (commercial register 83594), and a subsidiary of Inktank Communications. Summaries are intended for guidance only and are provided on an as-is basis; kindly refer to the source article in its original language prior to undertaking any action. Neither Enterprise Ventures nor its staff assume any responsibility or liability for the accuracy of the information contained in this publication, whether in the form of summaries or analysis. © 2022 Enterprise Ventures LLC.

Enterprise is available without charge thanks to the generous support of HSBC Egypt (tax ID: 204-901-715), the leading corporate and retail lender in Egypt; EFG Hermes (tax ID: 200-178-385), the leading financial services corporation in frontier emerging markets; SODIC (tax ID: 212-168-002), a leading Egyptian real estate developer; SomaBay (tax ID: 204-903-300), our Red Sea holiday partner; Infinity (tax ID: 474-939-359), the ultimate way to power cities, industries, and homes directly from nature right here in Egypt; CIRA (tax ID: 200-069-608), the leading providers of K-12 and higher level education in Egypt; Orascom Construction (tax ID: 229-988-806), the leading construction and engineering company building infrastructure in Egypt and abroad; Moharram & Partners (tax ID: 616-112-459), the leading public policy and government affairs partner; Palm Hills Developments (tax ID: 432-737-014), a leading developer of commercial and residential properties; Mashreq (tax ID: 204-898-862), the MENA region’s leading homegrown personal and digital bank; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.