Emerging Markets Daily - February 15
Dollar Downside Lifts EM Sentiment, Japan Stocks Hit Three Decade High, Oil Prices Soar, Tesla to Make Cars in India, GM Sees Strong Growth in MEA Region
The Top 5 Emerging Markets Stories - February 15
Goldman’s Dollar Downside Call Lifts EM Sentiment
“Emerging-market investors seem to have a lot going for them right now -- and the renewed weakness in the U.S. dollar is adding to the bullish mood.”
“MSCI Inc.’s index tracking developing-nation currencies climbed to a record on Friday as the dollar posted its biggest weekly drop in 2021, even as U.S yields rose. A measure of implied volatility fell to the lowest since July, underscoring optimism about a vaccination-led global recovery and the prospect of more U.S. stimulus.”
“‘Global growth should be very strong over the next six months as the vaccination campaigns play out,’ Goldman Sachs Group Inc. strategists including Zach Pandl and Kamakshya Trivedi wrote in a note. ‘We expect global cyclical forces to dominate some degree of U.S. outperformance, resulting in dollar downside for most crosses.’”
“While the euro’s strength had driven most of the early weakness in the dollar, the yuan’s appreciation has been a more important factor since the second half of 2020, the strategists said. ‘Macro fundamentals for the yuan continue to look solid’ and China continues to attract inflows from global investors drawn to the strong equity performance and currency’s low volatility, they said,” Bloomberg reports.
Japan Stocks Hit Three Decade High as Asian Economies Rebound
“South Korean and Japanese shares led Asia higher, with the Nikkei 225 hitting 30,000 for the first time since 1990. Data showed Japan’s economy grew by double-digits last quarter, beating expectations. S&P 500 and European futures pointed to gains.”
“Countries easing restrictions include Malaysia, which will allow national football and hockey leagues to start training. Hong Kong will permit restaurant dining and relax other social-distancing rules after the Lunar New Year holiday. New US cases declined to the lowest week-to-week average since late October.”
“Japan’s gross domestic product grew an annualised 12.7 per cent from the prior quarter in the three months through December, Japan’s Cabinet Office reported Monday. Economists had forecast a 10.1 per cent expansion. Singapore reaffirmed its forecast for a rebound in economic growth this year,” South China Morning Post reports
Oil Prices Soar to Highest in More than a Year
“Oil prices soared on Monday to their highest in about 13 months as vaccine rollouts promised to revive demand and producers kept supply reined in. Brent crude was up 88 cents, or 1.4%, at $63.31 a barrel at 1320 GMT, after climbing to a session high of $63.76, the highest since Jan. 22, 2020.”
“U.S. West Texas Intermediate (WTI) crude futures gained $1.14, or 2%, to $60.61 a barrel. It touched $60.95 - its highest since Jan. 8 last year, earlier in the session. Oil prices gained around 5% last week.”
“Prices have rallied over recent weeks as supplies tighten, due largely to production cuts from the Organization of the Petroleum Exporting Countries (OPEC) and allied producers in the group OPEC+.”
“Russian Deputy Prime Minister Alexander Novak said the global oil market is on a recovery path and the oil price this year could average $45-$60 per barrel.”
“‘We’ve seen low volatility in the past few months. This means the market is balanced and the prices we are seeing today are in line with the market situation,’ Novak was quoted as saying,” Reuters reports.
Tesla to Make Electric Cars in India
“Tesla Inc. is closing in on an agreement to make electric vehicles in India for the first time, opening up a new growth opportunity after setting up production in China. Tesla has picked Karnataka, a southern state whose capital is Bangalore, for its first plant, the state’s chief minister said over the weekend. The automaker has been negotiating with local officials for six months and is actively considering car assembly in the suburbs of Bangalore, people familiar with the matter said…”
“Tesla has focused on Bangalore because it’s shaping up to be a hub for electric vehicles and aerospace manufacturing talent, they said. Tesla has incorporated its Indian unit and registered offices in downtown Bangalore.”
Chief Executive Officer Elon Musk all but confirmed Tesla would enter India in January after months of speculation. The world’s richest man on Jan. 13 tweeted ‘as promised’ in response to a report on a Tesla-focused blog that the automaker was in talks with several Indian states to open an office, showrooms, a research and development center -- and possibly a factory,” Bloomberg reports.
General Motors Sees Robust Growth in Middle East and Africa This Year
“General Motors intends to achieve double-digit growth in sales across the Middle East and Africa, with the help of its first electric sports utility vehicle to hit the market.”
“The Detroit car maker will begin deliveries of the new vehicle, the 2022 Bolt EUV, from September this year, an executive told The National.”
“The company will also make its OnStar technology available across its Cadillac, Chevrolet and GMC brands in four Gulf markets in the coming months.”
“GM, which last month celebrated the sale of its two-millionth vehicle in the region since 2000, unveiled its first electric vehicle – the Bolt EV – in the Middle East in 2017.”
“‘[The] UAE is at the forefront of building the infrastructure and new announcements are also coming from Saudi Arabia,’ he said. ‘There will be a time when it will grow faster than today ... we believe [a] complete future of all-electric is around the corner but it will probably vary from one country to another,’” The National reports