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Emerging Markets Daily - February 8
India Bulls Charge Ahead, EM's Moment of Truth, Dollar Short Squeeze Looms, Taiwan Record Exports, Hyundai/Kia Say No Apple Deal on EVs
The Top 5 Emerging Markets Stories - February 8
Bulls Continue to Run in Indian Stocks - Business Standard
“Winning streak extended at the bourses into sixth straight day on Monday as investor optimism stayed elevated. An across-the-board buying helped frontline indices scale fresh record highs in the intra-day trade, before settling at new closing peaks. M-cap of all the listed firms on the BSE also hit record Rs 203 trillion in value.”
”Among key indices, the benchmark S&P BSE Sensex settled tad below the 51,350-mark, at 51,349 levels today, up 617 points or 1.22 per cent, aided by buying in M&M (up 7.4 per cent), Bajaj Finserv, Infosys, Tech M, and Bharti Airtel. On the downside, however, HUL (down 1.5 per cent), Bajaj Finance (down 0.7 per cent), and ITC (down 0.5 per cent) remained top laggards.”
“Weightage-wise, Infosys (up 3 per cent), Reliance Industries, ICICI Bank, M&M, and TCS contributed around 408-points towards overall gains on the index.”
“Its NSE counterpart Nifty50, meawhile, clinched the 15,100-mark on the closing basis and settled at 15,116 levels, up 191.5 points or 1.28 per cent. M&M, Hindalco, Shree Cement, JSW Steel, and Bharti Airtel were among the 40 of the 50 constituents that ended the day in the green.”
“The Sensex and the Nifty indices hit record peaks of 51,523 and 15,160, respectively,” Business Standard reports.
Could This Week Be EM’s Moment of Truth? - Bloomberg
“It’s a matter of pure conjecture, but the coming week may well be the moment when investors see the beginning of an end to the largess that helped propel emerging markets to unprecedented highs.”
“Though few expect a sudden turn of events, Russia’s interest-rate decision and the release of Brazilian inflation data could help settle a question that’s burgeoning in the minds of investors. Namely, how will markets in the developing world behave when central bankers tighten the policy screws?”
“‘Any sign of a change to tighter policies, for example in China, Brazil or Mexico, could lead to a broader correction of valuations across emerging-market debt,’ said Zsolt Papp, a money manager at JPMorgan Asset Management in London. ‘For now, the expectation is that most emerging-market central banks will maintain accommodative monetary policies.’”
“Developing-nation dollar bonds had their biggest weekly advance this year in the five days through Friday after weaker-than-forecast U.S. jobs data bolstered the case for President Joe Biden’s $1.9 trillion relief package. An index of emerging-market equities clocked up its best week since November,” Bloomberg reports.
Are We on the Verge of a Dollar Short Squeeze? - Reuters
“The dollar steadied on Monday, recovering some ground against a basket of peer currencies after falling sharply on worse than expected U.S. jobs data last week.”
“The dollar index traded 0.2% higher on the day, at 91.174.. On Friday, it fell as low as 90.981 after data showed the U.S. economy created fewer jobs than expected in January and job losses the previous month were greater than initially reported.”
“Speculators have been reducing short positions - bets the dollar will weaken - on the currency. Some analysts have flagged the likelihood that the same speculators will be forced out of their short positions by a rise in the dollar.”
“Net bearish bets on the dollar by speculators fell to $29.95 billion for the week ended Feb. 2, compared with a net short position of $33.81 billion for the previous week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data.”
Francesco Pesole, FX strategist at ING said, that even if the USD recovery stalls, ‘we could continue to see evidence of a USD short squeeze in the coming weeks,’” Reuters reports.
Taiwan Hits Record Exports in January - South China Morning Post
“Taiwan exported a record-high amount in January, fuelled by rising demand for semiconductors and by companies rushing to get components ahead of the Lunar New Year holidays in February.”
“Shipments surged almost 37 per cent to US$34.3 billion, the most in data going back to 1981. Imports also hit a record over the same period, up almost 30 per cent, according to data released on Monday by the Ministry of Finance in Taipei.”
“Taiwan’s economy was one of the strongest performers globally in 2020, with quick domestic suppression of Covid-19 and booming overseas demand for its goods driving strong exports and company profits. That trend looks to be extending into 2021,” South China Morning Post reports.
Hyundai, Kia Say No Apple Deal on Electric Cars - ChannelNews Asia
“South Korea's Hyundai Motor said on Monday (Feb 8) it is not now in talks with Apple on autonomous electric cars, just a month after it confirmed early-stage talks with the tech giant, sending the automaker's shares skidding.”
“Wiping US$2.4 billion off its market value, Hyundai stock slumped 4.3 per cent by 0428 GMT (12.28pm, Singapore time). Shares in its affiliate Kia Corp, which had been tipped in local media reports as the likely operational partner for Apple, tumbled 12.8 per cent - a US$4.7 bilion hit.”
“The announcement brings the curtain down on weeks of internal divisions at Hyundai Motor - parent to both automakers - about the potential tie-up, with some executives raising concerns about becoming a contract manufacturer for the US tech giant in a tie-up reminiscent of electronics firm Foxconn's role in making device for Apple like the iPhone.”
"‘We are receiving requests for cooperation in joint development of autonomous electric vehicles from various companies, but they are at early stage and nothing has been decided,’ the automakers said on Monday, in compliance with stock market rules requiring regular updates to investors regarding market rumors,” ChannelNews Asia reports