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Tuesday, 28 December 2021

It was a terrible, horrible, no good year for bonds (except for EMs)

2021 looks set to register the worst year for the global bond market since 1999, the Financial Times reports. Barclays global bond index, which tracks USD 68 tn worth of corporate and sovereign bonds, has delivered a negative return of 4.8% for the year so far as investors flee government debt on the back of rising global inflation. Portfolio managers largely expect the bond market to continue to struggle next year as central banks move to raise rates in an attempt to curb rising prices. Nevertheless, some say bonds could recover in 2022 if equities begin to wobble on the back of tighter policies from major central banks.

The silver lining: The best-performing bonds this year were all issued by emerging markets, according to data compiled by Bloomberg. The only sovereign bonds to register a positive return this year were those issued by South Africa, China, Indonesia, India and Croatia, as coupon returns offset price drops. Collectively, EM bond markets fell 1.3% in 2021 — but avoided a more major drop despite the hawkish turn from the US Fed.

And our bond market should remain attractive: Coupons and interest rate differentials will be the deciding factors for EM fixed-income investors in a tightening monetary environment next year, one analyst told Bloomberg. That bodes well for Egypt, which has one of the highest real interest rates in the world — a key factor in reducing volatility.

Down

EGX30

11,850

-0.1% (YTD: +9.3%)

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

Down

Tadawul

11,161

-0.1% (YTD: +28.4%)

Up

ADX

8,404

+0.1% (YTD: +66.6%)

Up

DFM

3,188

+0.9% (YTD: +27.9%)

Up

S&P 500

4,791

+1.4% (YTD: +27.6%)

None

FTSE 100

7,372

– (YTD: +14.1%)

Up

Brent crude

USD 75.87

+0.4%

None

Natural gas (Nymex)

USD 4.06

Up

Gold

USD 1,812.90

+0.2%

Down

BTC

USD 50,796.10

-0.1%

THE CLOSING BELL-

The EGX30 fell 0.1% yesterday on turnover of EGP 946.7 mn (29.1% below the 90-day average). Foreign investors were net buyers. The index is up 9.3% YTD.

In the green: Sidi Kerir Petrochemicals (+2.8%), Oriental Weavers (+2.0%) and Speed Medical (+1.5%).

In the red: Rameda (-3.4%), CIRA (-2.8%) and GB Auto (-2.8%).

Major Asian benchmarks are in the green this morning with the exception of Shanghai, which was (slightly) in the red at dispatch time. The S&P 500 hit a new record overnight, but we’re looking at a mixed open in Europe and futures suggest shares in Wall Street will open in the red 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; and Industrial Development Group (IDG) (tax ID:266-965-253), the leading builder of industrial parks in Egypt.