South Africa

Business Maverick: Emerging Markets Trust China’s Virus Steps to Keep Rally Going

Emerging markets may take their cue this week from a recovery in commodities and signs China’s efforts to stem the spread of the coronavirus are working.

Gauges of stocks, bonds and currencies in developing economies all rose in the five days through Friday as raw-material prices had their best week this year. Chinese officials urged the nation to meet its economic targets for 2020 as Hubei province, the epicenter of the outbreak, reported a slowing rate of new infections.

Despite a rally since late January, emerging markets have underperformed stocks and bonds in the developed nations. That trend should soon reverse, according to Pictet Asset Management, which oversees almost $600 billion of assets.

“Valuations in emerging markets, given what’s going on, are more attractive than developed markets,” Luca Paolini, the London-based chief strategist at Pictet, said in an interview.

MSCI Inc.’s index of emerging equities rose 1.3% last week to pare its yearly loss to 0.8%. Currencies strengthened for the first time in four weeks, led by the Mexican peso, South African rand and Russian rubles. Bloomberg’s gauge of commodities climbed for the first time since the week of Jan. 3.

EM assets have lagged developed markets since virus sell-off started

Saudi G-20

Turkey, Indonesia Rates

  • Bank Indonesia is expected to cut its benchmark interest rate on Thursday, having been among the most vocal Asian central banks in saying they will keep policy accommodative to counter the economic impact of the coronavirus
  • In Turkey, analysts expect Central Bank Governor Murat Uysal to continue his rate-slashing spree on Wednesday, moving a step closer to the single-digit borrowing cost demanded by President Recep Tayyip Erdogan. That’s even as aggressive monetary easing has brought Turkish interest rates below inflation