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Tuesday, 20 September 2022

Asian markets are doing better than the rest of us at weathering the global market turmoil

Emerging Asia could offer a haven from stagflation: Investors are pivoting towards emerging Asian bonds and currencies amid global market turmoil, Bloomberg reports. Emerging Asia bonds made total losses of around 9% this year, beating out the 11% loss seen by US treasuries and the 16% dip in global EM bond markets. The favorable positioning is mainly thanks to the record FX reserves that Asian countries have been building since the Asian financial crisis, and prudent fiscal policy keeping inflationary pressures low. That’s laid the groundwork for the region’s bonds and currencies to outperform traditional safe-haven assets like the EUR, as developed economies struggle to balance the need to raise interest rates with the threat of a looming global recession.

Fed rate hikes take the shine off gold: Gold is down 20% from all-time highs recorded in August 2020, on high US treasury yields and a surging USD which has reached its highest level in more than 20 years, according to Wall Street Journal. Gold is usually a key safe haven asset during market turmoil but the most actively-traded contract has lost 14% over the past six months, as rising yields attract investors to US treasuries. Analysts expect the Fed to apply a third successive 75 bps hike in its meetings today and tomorrow.

US Climate Envoy John Kerry warned against long-term investments in gas projects in Africa, telling Reuters that long-term projects may not be viable post-2030 when many developed countries should have transitioned to mostly renewable energy sources. "We are not saying no gas,” Kerry said on the sidelines of an African environment ministers' conference in Senegal’s Dakar. "What we are saying is, over the next few years, gas replaces coal or replaces oil," he said.

This could set up a clash with African nations at COP27 who are asserting their right to continue investing in oil and gas, arguing that the move is key to their development even as some wealthier nations step up calls to phase out fossil fuels.

The UAE wants to pump more, faster: The UAE wants to accelerate a plan to raise its oil production capacity to 5 mn barrels a day, bringing forward its target by five years to 2025 as it looks to capitalize on elevated oil prices, Bloomberg reports, citing people it says are familiar with the matter. Abu Dhabi energy giant Adnoc currently has the capacity to produce a little over 4 mn barrels a day, but is capped from reaching those levels by the OPEC cartel, which imposes production limits to balance the global market. The UAE’s daily crude output was nearly 3.4 mn barrels last month, according to data compiled by Bloomberg.

UAE could help Germany limit the gas crunch: German Chancellor Olaf Scholz is expected to sign gas delivery contracts with the UAE during a two-day visit to the region next week, which will also include visits to Saudi Arabia and Qatar, Bloomberg reports.

Up

EGX30

9,854

+0.9% (YTD: -17.5%)

None

USD (CBE)

Buy 19.39

Sell 19.47

None

USD at CIB

Buy 19.39

Sell 19.45

None

Interest rates CBE

11.25% deposit

12.25% lending

Down

Tadawul

11,446

-1.1% (YTD: +1.5%)

Down

ADX

10,096

-1.0% (YTD: +18.9%)

Down

DFM

3,474

-0.4% (YTD: +8.7%)

Up

S&P 500

3,890

+0.7% (YTD: -18.2%)

Down

FTSE 100

7,237

-0.6% (YTD: -2.0%)

None

Euro Stoxx 50

3,499

0.0% (YTD: -18.6%)

Up

Brent crude

USD 91.76

+0.5%

Down

Natural gas (Nymex)

USD 7.75

-0.2%

Down

Gold

USD 1,678.20

-0.3%

Up

BTC

USD 19,542

+0.4% (YTD: -57.6%)

THE CLOSING BELL-

The EGX30 rose 0.9% at yesterday’s close on turnover of EGP 829.43 mn (12.8% below the 90-day average). Local investors were net buyers. The index is down 17.5% YTD.

In the green: Rameda (+4.8%), Palm Hills (+3.1%) and Fawry (+2.7%).

In the red: Telecom Egypt (-2.0%), Mopco (-2.0%) and Orascom Construction (-0.6%).

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.

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