Things are looking up for EM equities on the MSCI Emerging Market (EM) Index, buoyed by constituent companies reporting better-than-expected earnings, reports Bloomberg. The market is now waiting on results from index heavyweights Samsung Electronics, China Construction Bank, and Sberbank of Russia to come in later this week, potentially extending the index’s three-week rally. The performance of Chinese companies, which make up 31% of the MSCI EM index and have been hard-hit by Chinese regulatory tightening, will also be critical. The MSCI Index has lagged since 2018, with EMs contending with a host of challenges, including regulatory crackdowns in China and possible stagflation. But as economies recover and vaccination rates gain speed, bank, energy and materials earnings are expected to pick up too.

Pandemic-era spending may not be paying off for many EMs: Emerging-market economies that copied rich nations by splurging on pandemic stimulus have not seen this translate into a stronger economic recovery, Morgan Stanley’s chief global strategist, Ruchir Sharma, writes in the Financial Times.

Why? Easy-money policies are more difficult to pull off for EMs. Emerging economies tend to be more exposed to inflationary pressures, currency swings, higher interest rates and fiscal stress, factors that can be exacerbated by overspending. Hence, a year down the line, countries that went big on stimulus — including Hungary, Brazil and the Philippines — have seen more muted growth than thriftier counterparts like Taiwan, South Korea and Mexico, he claims.

Now big spenders are stuck trying to balance the books: “Nations that spend in haste are often forced to repent at leisure,” Sharma writes.

THE CLOSING BELL-

The EGX30 fell less than 0.1% at yesterday’s close on turnover of EGP 1.72 bn (11.6% above the 90-day average). Foreigns investors were net sellers. The index is up 3.1% YTD.

In the green: Cleopatra Hospitals (+5.6%), CIRA (+2.8%) and CIB (+2.1%).

In the red: Aspire Capital (-9.9%), Madinet Nasr Holding (-9.0%) and Gadwa Industrial Development (-7.6%).