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Thursday, 1 December 2022

Is EM sovereign debt a bright spot in tough markets? + The majority of EMEA corporate debt could be ESG-linked next year

EM debt could be a standout asset as treasuries + credit take a nosedive: Jupiter Asset Management executive Mark Nash is shorting nearly every asset including US treasuries and credit — but sees value in emerging-market sovereign debt, he tells Bloomberg. Nash is buying securities sold by Brazil, Indonesia and Mexico — all of which have benefited from a commodities boom and enacted early rate hikes to protect positive real yields. His bond fund has posted 5.7% gains so far this year, beating 96% of its peers. Some EMs “have high real yields, they have better trade balances, and they generally have better fiscal coffers,” Nash said.

Is ethical debt the future of the loan market? At least 50% of corporate loans extended in Europe, the Middle East and Africa could be tied to environmental, social and governance (ESG) principles next year, up from 36% this year, according to bankers interviewed by Bloomberg. Firms are beefing up their environmental credentials thanks to nudges from regulators and clients. “We keep seeing the increasing trend in the market that clients put sustainability higher on the agenda and want to embed sustainability characteristics in their financing,” ING Group’s head of sustainable finance for EMEA told the business news service.

ESG is one debt market where EMs aren’t excelling: ESG investors aren’t huge fans of EMs at the moment, thanks to worries over risk.

Also worth mentioning this morning:

  • Saudi Arabia’s sovereign wealth fund PIF has secured a new USD 17 bn loan from a syndicate of 25 international lenders, the largest ever loan of its kind. (Statement)
  • Europe is not a fan of Musk’s Twitter: The European Commission has warned tech b’naire Elon Musk that Twitter is at risk of a ban unless he adheres to rules on content moderation. (FT)

Up

EGX30

13,259

+0.6% (YTD: +11.0%)

None

USD (CBE)

Buy 24.53

Sell 24.62

None

USD at CIB

Buy 24.54

Sell 24.60

None

Interest rates CBE

13.25% deposit

14.25% lending

Up

Tadawul

10,897

+1.4% (YTD: -3.4%)

Up

ADX

10,552

+1.5% (YTD: +24.3%)

Up

DFM

3,324

+0.6% (YTD: +4.0%)

Up

S&P 500

4,080

+3.1% (YTD: -14.4%)

Up

FTSE 100

7,573

+0.8% (YTD: +2.6%)

Up

Euro Stoxx 50

3,965

+0.8% (YTD: -7.8%)

Up

Brent crude

USD 85.43

+2.9%

Up

Natural gas (Nymex)

USD 7.00

+1.1%

Up

Gold

USD 1,789.00

+1.7%

Up

BTC

USD 17,167

+2.1% (YTD: -62.8%)

THE CLOSING BELL-

The EGX30 rose 0.6% at yesterday’s close on turnover of EGP 3.53 bn. Foreign investors were net sellers. The index is up 11.0% YTD.

In the green: EFG Hermes (+5.8%), e-Finance (+4.1%) and Orascom Construction (+3.9%).

In the red: Eastern Company (-7.1%), Ibnsina Pharma (-2.3%) and Palm Hills Development (-2.2%).

Green as far as the eye can see: Asian markets are up across the board in early trading this morning, while futures suggest a similarly bright start for European markets and on Wall Street later on 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.