Back to the complete issue
Wednesday, 11 May 2022

Emerging-market currencies see biggest losses since 2020

EM currencies see biggest losses since 2020: Emerging-market currencies are suffering as investors pull out of risk assets in response to rising interest rates in the US and the economic slowdown in China, according to the Financial Times. The MSCI Emerging Markets Currency Index dropped over 4% since the beginning of April, the largest fall since the onset of the pandemic in early 2020. The sell-off comes as the Federal Reserve embarks on its most aggressive tightening cycle in decades, strengthening the USD and pulling money out of risky EM assets and into the US financial system.

The same factors are weighing on EM debt, which JPMorgan strategists say are at the “mercy” of Fed policymakers. The asset class has seen USD 4 bn in net outflows since the middle of last month while a JPMorgan gauge of EM bonds has slumped 16% so far this year, with rates being responsible for “most of the losses,” the investment bank said. "The external and fundamental backdrop has become increasingly difficult for EM sovereigns," they said. "The covid lockdown in China poses further downside risks."

“What downturn?,” asks the Gulf IPO market: The world’s biggest asset managers are heading to the Gulf to get a piece of the region’s red-hot IPO market, where companies are capitalizing on the surge in oil revenues and selling shares to the public, Bloomberg reports. Middle Eastern companies have traditionally sought listings in more developed markets in the US and UK, but investors are increasingly being drawn to exchanges in the region as the volume of IPOs rises while offerings slow abroad. Two of the world’s biggest asset managers, BlackRock and Vanguard, both bought into Dubai Electricity & Water Authority’s IPO, which raised USD 6.1 bn last month.

Up

EGX30

10,811

-0.9% (YTD: -9.5%)

Up

USD (CBE)

Buy 18.44

Sell 18.53

None

USD at CIB

Buy 18.45

Sell 18.53

None

Interest rates CBE

9.25% deposit

10.25% lending

Down

Tadawul

13,509

-2.2% (YTD: +19.8%)

Down

ADX

9,915

-0.9% (YTD: +16.8%)

Down

DFM

3,598

-0.7% (YTD: +12.6%)

Up

S&P 500

4,001

+0.3% (YTD: -16.1%)

Up

FTSE 100

7,243

+0.4% (YTD: -1.9%)

Up

Euro Stoxx 50

3,555

+0.8% (YTD: -17.3%)

Down

Brent crude

USD 101.60

-4.1%

Up

Natural gas (Nymex)

USD 7.39

+5.1%

Down

Gold

USD 1,841.00

-1.0%

Down

BTC

USD 30,394

-1.1% (YTD: -33.0%)

THE CLOSING BELL-

The EGX30 fell 0.9% at yesterday’s close on turnover of EGP 637 mn (27.5% below the 90-day average). Local investors were net buyers. The index is down 9.5% YTD.

In the green: Cleopatra Hospitals (+4.6%) and CIB (+0.2%).

In the red: Abu Qir Fertilizers (-3.8%), Orascom Construction (-2.9%) and Fawry (-2.7%).

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; 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.