Emerging Markets Monitor - Sept 9
Futures Signal Trouble for India Stocks, EM Underperformance, Saudi Economy Sizzles, Ukraine's Robust Counter-Offensive, China Chip-Makers and U.S Ban
The Top 5 Stories Shaping Emerging Markets from Global Media - Sept. 9
Futures Positioning Shows Foreign Investors Wary of India Stocks
Bloomberg
“Indian equity bulls may find the going tough if a slew of derivatives data is on point.”
“The NSE Nifty 50 Index has rallied more than 15% from a June low, outperforming most global benchmarks amid a plethora of headwinds, most notably inflation. Recent data, however, point to risks for the rally.”
“Futures flows show foreign investors are scaling back their optimism on Indian stocks as the Nifty flirts with its 18,000 resistance level, while local retail traders have started piling back in.” Bloomberg reports
EM Underperformance vs Advanced Economy Stocks Likely This Year
The Economist
“Halfway through the year, as commodity prices soared and stock markets plunged, it looked as if emerging-market stocks might do something they had managed only once in the past decade: to beat the returns of American ones. Two months on and the hope is gone. A small bounce in rich-world share prices means emerging-market underperformance will probably continue.”
“America’s interest-rate rises—and the expectation of more to come this year—have not helped emerging-market economies, especially those with large import bills and dollar-denominated debts. Over the past decade, though, the performance of the dollar has been mixed and interest rates low. In the same period, the msci em index has returned just 2.9% a year, against 9.5% for rich-world stocks.”
“A big problem is the growing gap between emerging-market and rich-world profits. In the heyday of emerging-market returns, before the global financial crisis of 2007-09, margins for the two indices were similar. But unlike American stocks, emerging-market profits never recovered. Forward margins—net profits expected by analysts this year and next—sit at 7.5% in emerging markets, compared with 12.8% in America and 8.9% in the euro zone. The gap is the widest it has been this century.” The Economist reports.
Saudi Economy Sizzles, Grows at 12.2% in Second Quarter
The National
“Saudi Arabia’s economy grew by 12.2 per cent in the second quarter, exceeding initial estimates and registering the fastest expansion in more than a decade, due to higher oil prices.”
“The annualised real gross domestic product growth in three months to the end of June was the quickest since the third quarter of 2011, the kingdom’s General Authority for Statistics, better known as Gastat, said on Thursday.”
“The headline growth rate was higher than the 11.8 per cent second-quarter flash estimate released at the end of July by the authority. Quarter on quarter, the kingdom’s GDP expanded 2.2 per cent, according to the latest Gastat data.”
“Oil-related economic activity in Saudi Arabia, Opec’s biggest crude producer, jumped by about 23 per cent on an annual basis during the April to June quarter. The hydrocarbons sector grew 4.4 per cent, compared with the first three months of the year.”
“Non-oil economic activity rose 8.2 per cent on an annual basis, revised higher by Gastat from its 5.4 per cent flash estimates. On quarterly basis, the non-oil sector recorded a 4.5 per cent rise.” Sarmad Khan reports.
Ukraine Claims Significant Gains in Counter-offensive Against Russia
Financial Times
“Ukraine claimed to have regained territory in its eastern regions in the most successful counter-attacks since troops repelled an assault on Kyiv and the north-east by Russian forces in the first months of the war.”
“The territorial gains have been made while Moscow is focused on repelling Ukraine’s southern counter-offensive around Kherson and could weaken Russia’s hold on the Donbas region, analysts said.”
“…The advance boosts Kyiv’s hopes of cutting supply lines to those troops, which are focused on trying to fully capture the eastern Donbas region.” The FT reports.
U.S Ban on Nvidia, AMD Chips Seen as Boosting Chinese Domestic Rivals
Channel News Asia
“The US ban on exports to China of Nvidia and AMD's flagship artificial intelligence chips will create new business opportunities for domestic startups jockeying for a piece of China's fast-growing data center chip market, industry executives and analysts told Reuters.”
“The ban is part of a longer effort by the US government to crack down on US contributions to Chinese artificial intelligence and high-performance computing, or supercomputing. Last year, US officials put seven Chinese supercomputing entities on an economic blacklist, and last week they banned Nvidia and AMD's chips from export to China ‘to keep advanced technologies out of the wrong hands’.”
“On Thursday, an independent group that measures artificial intelligence speeds published new data that can help back up the claims of little-known Chinese startup Shanghai Biren Intelligent Technology Co that its latest chip has bested the performance of one of the high-end chips banned by the US government.”
“The milestone is viewed as an opening for Chinese domestic chip companies to service Chinese customers cut off from access to US chips, experts said.” CNA reports.
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