Back to the complete issue
Thursday, 25 November 2021

The emerging-market bears are massing

A quarter of investors surveyed by HSBC are bearish about investing in emerging markets, thanks to slowing economic growth and imminent monetary tightening by the US Federal Reserve, according to Reuters. Sentiment is low compared to an earlier survey, which found that only 10 investors were bearish about EMs. The prior survey also saw a higher proportion of 40% feeling bullish, compared to only 27% this time around.

Worries over when the Federal Reserve will raise interest rates in response to accelerating inflation are weighing on EMs, with investors naming policy tightening the biggest risk for the asset class. The poll featured 120 investors from 115 institutions with USD 572 bn in AUM.

This comes at a time when rising inflation and supply-chain disruptions are already making 2021 a year to forget for the asset class. Investors have sold local-currency debt, many currencies have fallen significantly, and EM equities are seriously lagging versus developed markets, currently trading at their biggest discount in 17 years.

Down

EGX30

11352.64

-0.2% (YTD: +4.7%)

None

USD (CBE)

Buy 15.66

Sell 15.76

None

USD at CIB

Buy 15.66

Sell 15.76

None

Interest rates CBE

8.25% deposit

9.25% lending

Up

Tadawul

11,369

+1% (YTD: +30.8%)

Down

ADX

8,398

-0.1% (YTD: +66.5%)

Up

DFM

3,157

+0.4% (YTD: +26.7%)

Up

S&P 500

4,701

+0.2% (YTD: +25.2%)

Up

FTSE 100

7,280

+0.2% (YTD: +12.4%)

Down

Brent crude

USD 82.19

-0.2%

Up

Natural gas (Nymex)

USD 5.07

+2.0%

None

Gold

USD 1,787

0.0%

Down

BTC

USD 57,440

-0.4% (as of midnight)

THE CLOSING BELL-

The EGX30 fell 0.2% at yesterday’s close on turnover of EGP 897 mn (38.5% below the 90-day average). Local investors were net sellers. The index is up 4.7% YTD.

In the green: EFG Hermes (+6.7%), GB Auto (+4.3%) and Gadwa for Industrial Development (+2.3%).

In the red: Rameda (-4.1%), Fawry (-2.5%) and Credit Agricole Egypt (-1.4%).

Asian stocks are mostly down this morning as traders react to the release of the Fed meeting minutes yesterday, which indicated that the central bank is open to accelerating the taper should inflation continue to rise. Shares in the US and Europe are on course to open in the green later today.

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; Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt; Hassan Allam Properties (tax ID:  553-096-567), one of Egypt’s most prominent and leading builders; and Saleh, Barsoum & Abdel Aziz (tax ID: 220-002-827), the leading audit, tax and accounting firm in Egypt.