U.S. Election Propels Assets to Best Week in Five Months

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© Bloomberg. U.S. -elect Joe Biden speaks while delivering an address to the nation during an election event in Wilmington, Delaware, U.S., on Saturday, Nov. 7, 2020. Photographer: Sarah Silbiger/Bloomberg

(Bloomberg) — Emerging-market assets rallied last week, dictated by the U.S. election that eventually resulted in a victory for Democrat Joe Biden during vote counting over the weekend. Developing-nation stocks climbed to the highest level in more than two years with both equities and currencies posting their best week in five months. The left interest rates near zero and made no change to asset purchases.

The following is a roundup of emerging-market news and highlights for the week through Nov. 6:

Highlights:

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Biden defeated Donald Trump and he will become the 46th U.S. president, unseating the incumbent with a pledge to unify and mend a nation reeling from a worsening pandemic, faltering economy and deep political divisions
The president-elect called on Americans to put aside the divisiveness of the past four years under Trump with a victory speech that promised swift action against the coronavirus pandemic and an orderly transfer of after a bitter election

The U.S. became the first country with more than 100,000 daily Covid cases; the number of daily deaths also climbed, topping 1,000 for a third day
Fed Chair Jerome Powell opened the door to a possible shift in the central ’s bond purchases in coming months, saying more fiscal and monetary support are needed
U.S. nonfarm payrolls increased by 638,000 in October, beating the median estimate of 580,000

The U.S. dismissed as “unacceptable” Beijing’s warnings of further retaliation if the visas of Chinese journalists working in America weren’t renewed;
Chinese President Xi Jinping called for setting up independent and controllable supply chains to ensure industrial and national security, just as the U.S. moves to cut China off from key exports

Malaysia’s central bank held its benchmark rate at a record low, while warning of downside risks from the pandemic
kept borrowing costs unchanged at a record low 0.1% as new projections indicated that inflation will remain elevated
Brazil’s central bank said possible changes to fiscal policy may alter its pledge to keep the benchmark interest rate at a record low for the foreseeable future
Czech policy makers signaled they may postpone planned rate increases as the second wave of the coronavirus pandemic clouds the outlook for the economy
Turkish President Recep Tayyip Erdogan fired the country’s central bank governor, the second time in 16 months he’s ousted the top monetary official, as a series of interest rate increases failed to halt the lira’s slide to a record low

Asia:

Asia’s factories pushed ahead in October as managers remained upbeat about recovery prospects and virus outbreaks become less severe, manufacturing gauges show

Chinese President Xi Jinping is signaling his long-term vision for the economy likely requires it to expand at a average pace of less than 5% a year, well below its historical trend

People’s Bank of China Governor Yi Gang said a pilot program on the rollout of a digital currency in four cities has been smooth and there have been more than 4 million transactions
The shock suspension of Ant Group Co.’s $35 billion initial public offering is just the beginning of a renewed campaign by China to rein in the fintech empire controlled by Jack Ma
China’s government has ordered a halt to imports of Australian products including coal, barley, copper ore and concentrate, sugar, timber, wine and lobster, people familiar with the situation has said. The government has ordered the halt to begin on Nov. 6, one of the people said

South Korea’s manufacturing sector activity expanded for the first time this year in October
South Korea President Moon Jae-in rejected an offer by the finance minister to step down in the wake of a public backlash

Activity in India’s dominant services sector expanded in October for the first time in eight months, supporting a view that a recovery has been picking up since the economy lifted a lockdown
India has scaled back expenditure, including on productive assets that aid economic growth, as the government is confronted with the risk of its budget deficit blowing out
Prime Minister Narendra Modi invited global funds and businesses to invest in India, pitching the nation as a safe and stable destination

Indonesia’s economy contracted again in the third quarter, falling into its first recession since the Asian financial crisis more than two decades ago
Indonesia’s omnibus law is set to face a judicial review sought by a labor union after President Joko Widodo signed the bill into law
Indonesia has spent only about half of its pandemic relief funds
Indonesia’s unemployment rate surged to the highest level since 2011

Thai pro-democracy protesters plan to hold a new rally and petitioned King Maha Vajiralongkorn, a day after rejecting a parliament-initiated plan to form a committee to ease the political tensions
Thailand approved a slew of new incentives covering electric cars, buses, trucks, motorcycles and ships to promote local production
Thailand’s Constitutional Court will rule next month on whether Prayuth Chan-Ocha, a coup leader turned premier, broke rules that would disqualify him from continuing as the country’s leader

Bangko Sentral ng Pilipinas will likely retain monetary easing measures as long as the Philippines is off track with its long-term growth and employment targets, Governor Benjamin Diokno said
Philippine exports halted six months of declines in September while imports fell by their slowest pace since February

A year of turmoil in Malaysia is coming down to a budget vote in the next few weeks that will double as a test of confidence in Prime Minister Muhyiddin Yassin
Palm oil inventories in Malaysia probably tumbled to their lowest in more than three years
Malaysia unveiled the largest budget in its history for 2021, boosting on social sectors and infrastructure

Taiwan’s economy expanded at its fastest pace in more than two years
The U.S. Department of Commerce is imposing a preliminary anti-subsidy tariff on car and truck from Vietnam, citing the nation’s “undervalued currency” among the reasons for the decision

EMEA:

Support for Poland’s ruling party plunged after its chairman, Jaroslaw Kaczynski, defended a Supreme Court abortion ruling, denounced protesters and called on people to defend churches “at all costs”

The government is stalling the implementation of a high-court ruling that effectively bans abortion amid some of the biggest street demonstrations in decades, while shifting blame for a record coronavirus outbreak on protesters

Russia for the first time reported more than 20,000 Covid-19 cases in the last day
’s government set out new measures to fight the coronavirus pandemic, reinstating a state of emergency and imposing a midnight curfew
Turkish energy group Aydem Holding AS is gearing up for an initial public offering of its renewable-electricity producer next quarter that could value the unit at as much as $1.5 billion, according to people with knowledge of the matter
Romania will impose more stringent restrictions, including a nighttime curfew, to try to limit a significant surge in new coronavirus cases
Ukraine’s parliament passed the 2021 budget in an initial reading as it seeks to meet the conditions to secure the next tranche of a $5 billion loan
Abu Dhabi National Energy Company advanced as much as 15% on Thursday after the company said it would consider allowing foreigners to buy its shares
Business activity in Egypt grew at its fastest pace in almost six years, buoyed by an uptick in new orders, while Saudi Arabia saw a second month of milder improvements
Saudi Arabia will remove several controversial restrictions on foreign in a labor policy overhaul that officials hope will attract overseas talent and reduce unemployment
Saudi Aramco (SE:2222) left its third-quarter dividend unchanged even as it failed to generate enough cash to cover the payout and reported a 45% drop in profit

The U.S. and European Union appealed to Ivory Coast’s political leaders to hold talks over the nation’s disputed election, as a key opposition leader urged the to defy President-elect Alassane Ouattara
Ivory Coast’s Eurobonds are handing investors the best returns in Africa even though the nation is embroiled in a disputed election

Ethiopia’s leader ordered the military to respond to an alleged attack on an army camp in the restive Tigray region, escalating a standoff between the federal and state governments
Tunisia’s prime minister said he was hopeful the central bank would step in and help finance the budget deficit, saying that the country was facing dire economic conditions
Kenya is in talks with the International Monetary Fund for a fund arrangement, according to the lender’s resident representative

Latin America:

Brazil’s industrial production rose for a fifth month in September, the longest streak of gains since 2012
Consumer prices rose 0.86% in October from the prior month, above the 0.84% median forecast
Brazilian prosecutors charged the eldest son of President Jair Bolsonaro with money laundering and embezzlement
The Senate approved draft legislation that grants the central bank its long-sought formal autonomy, while adding a full-employment goal to its main inflation target
Congress overturned a presidential veto on corporate payroll tax reductions, further straining the nation’s budget amid unprecedented stimulus spending

Argentina is shifting tack and has begun adopting more orthodox economic measures to try to shore up investor confidence and lure capital back into the country

Economy Minister Martin Guzman said the government is building a “stability bridge” for the next 60 to 90 days while it comes up with a multi-year macroeconomic plan
The government extended the deadline for holders of local dollar law debt to exchange their securities for new notes until July 2021
An IMF mission will arrive in Buenos Aires for meetings with government officials

The Mexican peso headed for its biggest quarterly gain in almost three years

Banxico Deputy Governor Gerardo Esquivel said the central bank still has room to cut rates, but policy makers don’t plan to use it now
Mexican prosecutors are pursuing an arrest warrant against former Finance Minister Luis Videgaray in a probe involving alleged bribery and illegal campaign financing
Mexico will be excluded from any potential tariffs that the U.S. applies to electrical steel from other countries on national-security grounds after agreeing to monitor its exports for transshipment

Colombia’s central bank governor, Juan Jose Echavarria, said the rate cut cycle has ended “at least for a period”

The inflation rate unexpectedly dropped to 1.75% in October from a year earlier, the lowest level in more than six decades
The central bank revised a 2020 GDP forecast to a 7.6% contraction from negative 8.5% in previous quarterly monetary policy report
Fitch Ratings affirmed the country at BBB- with a negative outlook

Peru President Martin Vizcarra called on Congress to hold a vote on his impeachment as soon as possible, saying political uncertainty is damaging for the country
Congress approved a bill allowing workers to withdraw up to 17,200 soles ($4,732) each from private pension accounts

Chile’s economy contracted at the slowest pace in six months in September after industries floored by the pandemic bounced back and the government lifted lockdown restrictions
Inflation unexpectedly sped up in October, rising 0.7% from the month prior compared with a 0.3% forecast

Uruguay’s central bank kept its benchmark rate unchanged at 4.5%, saying monetary policy will have an expansive bias at least through the end of the Southern Hemisphere summer

©2020 Bloomberg L.P.

Source: Investing.com

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