Emerging Markets Daily - November 24
Investors Turn Bearish on EM, OPEC+ vs Joe Biden, Turkish Lira Rebounds on UAE Investment Talk, UK Says to Citizens: Leave Ethiopia Now, China Film Blockbuster
The Top 5 Stories Shaping Emerging Markets from Global Media - November 24
Investors Turning Bearish on Emerging Markets: HSBC Survey
Reuters
“More than one in four investors feel 'bearish' about emerging markets, an HSBC survey showed on Wednesday, as slowing economic growth and the spectre of tighter monetary policy in the United States clouds the outlook.”
“In July fewer than one in 10 investors surveyed were bearish, while the proportion of investors feeling bullish has dropped to 27% from 40%, HSBC said.”
“Markets have ramped up their expectations for interest rate hikes from the Federal Reserve and other central banks next year to keep a lid on inflation. The investors surveyed said tighter policy in developed economies was the single biggest risk to the outlook for emerging markets.”
"‘The global economy has faced a series of negative supply-side shocks that are causing downside risks to growth and upside risks to inflation,’ said Murat Ulgen, Global Head of EM Research at HSBC. ‘Emerging markets are a lot more susceptible to these shocks, hence their financial markets have markedly underperformed those of developed markets, and it seems like this 'stagflationary' backdrop is still keeping EM investors at bay.’”
“Emerging market assets have fared badly in 2021, with equities underperforming and many currencies suffering big falls. Foreign investors have been dumping local currency bonds. Emerging market equities are now trading at their deepest discount to developed markets since 2004, and the low valuation of some assets could tempt investors to dive back in, HSBC's Ulgen noted.” Reuters reports.
OPEC+ Rethinks Crude Output Rise After US Move on Strategic Reserves
Wall Street Journal
“Top oil producers Saudi Arabia and Russia are considering a move to pause their recent efforts to provide the world with more crude, according to people familiar with those discussions, after Washington and other countries said they would release a slug of stored oil in an effort to lower prices.”
“Riyadh and Moscow have led OPEC and a group of other oil-producing countries in coordinating output closely amid a demand shock last year caused by the pandemic. Other members of that cartel, including the United Arab Emirates, aren’t convinced a pause is necessary, according to these people.”
“The U.S. said Tuesday that it and a handful of other countries would tap their national strategic petroleum reserves amid high oil and gasoline prices. The move came after repeated attempts by Washington to convince the Saudi-led Organization of the Petroleum Exporting Countries and a group of Russia-led oil producers to open up their taps. The two groups, which call themselves OPEC+, are set to meet next week to review a long-term deal they reached earlier this year to boost their collective oil output.”
“The deal involves plans to boost output by 400,000 barrels a day each month through next year, until the group hits its pre-pandemic pumping level. The group slashed its output sharply in 2020 as demand evaporated amid Covid-19 lockdowns…”
“To compensate for the new supply, Riyadh and Moscow are now considering a pause of the group’s monthly collective increase, OPEC delegates said. The U.A.E., a powerful OPEC member that has clashed with Saudi Arabia over OPEC policy in the past, and Kuwait are resisting a pause, according to the delegates.” The Wall Street Journal reports.
Turkish Lira Rebounds on Prospect of Emirati Investments
Financial Times
“The Turkish lira rallied strongly as the crown prince of Abu Dhabi visited Ankara for the first time in almost a decade and markets were buoyed by the prospect of Emirati investment.”
“The currency, which yesterday lost almost 12 per cent of its value against the dollar, rebounded by as much as 10 per cent as the arrival of Mohammed bin Zayed al-Nahyan, the crown prince of Abu Dhabi, signalled a thaw in the relationship between the two countries.”
“The rally put the lira on course for its best day since August 2018, when the currency experienced huge swings. Trade and investment is expected to be top of the agenda during the meetings between Sheikh Mohammed and President Recep Tayyip Erdogan. They will sign deals for investment in energy, technology and health as well as ports and logistics, according to Turkey’s state-owned TRT news service.” The FT reports.
Leave Ethiopia Now, UK Gov’t Tells its Citizens As War Heats Up
African Business
“The UK government has advised its citizens to leave Ethiopia immediately as the government’s war with rebels from the Tigray region draws closer to Addis Ababa, warning that it is ‘likely to become much more difficult to leave Ethiopia in the coming days’.”
“‘The conflict has potential to escalate and spread quickly and with little warning. The FCDO [Foreign, Commonwealth and Development Office] advises against all travel to Ethiopia, except Addis Ababa Bole International Airport, because of the risk of the conflict spreading to new areas without prior warning,’ says the UK government’s official Ethiopia travel advice page.”
“In recent weeks, rebel forces from the Tigray People’s Liberation Front (TPLF) and its allies have made advances towards Addis Ababa in a bid to remove the government of prime minister Abiy Ahmed after a bloody conflict marked by ethnic massacres, starvation and the deaths of tens of thousands.”
“On 23 November, Ahmed vowed that he will lead his country’s army from the battlefront, the latest in a series of aggressive messages from the once-feted Nobel Peace Prize-winning leader.” African Business reports.
China’s Best-Selling Movie Ever Depicts US Loss in Korean War
Bloomberg
“Forget James Bond’s gadgets, the super cars of ‘Fast and Furious’ or ‘Dune’s’ stunning landscapes - when it comes to box office smash hits, China’s Communist Party has nailed it this year.”
“‘The Battle at Lake Changjin,’ a 176-minute epic starring Chinese actor Wu Jing, isn’t only the highest grossing film worldwide so far in 2021 but has become China’s biggest film ever -- toppling 2017’s ‘Wolf Warrior 2,’ which also stars Wu -- according to ticketing platform Maoyan Entertainment. The movie was commissioned by the Publicity Department of the Communist Party of China, otherwise known as the propaganda department.”
“The film tells the story of how People’s Volunteer Army (PVA) troops entered North Korea and valiantly defeated the Americans mid-last century. Since its September 30 release during China’s National Day, it has raked in a hefty $891 million, including presale tickets, according to Maoyan.”
“The movie’s release came after years of heightened tensions between the U.S. and China amid a protracted trade war and questions about Beijing’s early handling of Covid-19, with mainland borders remaining all but shut to outsiders amid pandemic restrictions.”
“And if one heroic defeat of the U.S. wasn’t enough, Variety reported that a sequel is already underway, entitled ‘Water Gate Bridge,’ which continues the story of the PVA’s campaign to drive American troops out of North Korea.” Bloomberg reports.
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