(Bloomberg) -- Emerging-market stocks headed for the biggest weekly gain since early November after Democrats won control of the U.S. Senate in Georgia runoff elections, spurring optimism for a boost in fiscal stimulus. U.S. Treasury yields broke above 1% for the first time since the pandemic-driven turmoil in March, spurring gains in the dollar and weighing on developing-nation currencies.
The following is a roundup of emerging-market news and highlights for the week through Jan. 8.
Highlights:
- Democrats won control of the U.S. Senate for the first time in six years with victories in two runoff races in Georgia -- a stunning result in a state that hadn’t sent a new Democratic senator to Washington for two decades
Joe Biden was formally recognized by Congress as the next U.S. president, ending two months of failed challenges by his predecessor, Donald Trump, that exploded into violence at the U.S. Capitol as lawmakers met to ratify the election result
- President Donald Trump condemned the storming of the U.S. Capitol -- which occurred after he urged his angry supporters to take action -- and said he would prepare for the administration of Biden
- The New York Stock Exchange is proceeding with a plan to delist three major Chinese telecommunications firms, its second about-face, after U.S. Treasury Secretary Steven Mnuchin disagreed with its shock decision to give the companies a reprieve
- MSCI Inc. and S&P Dow Jones Indices will remove the companies from benchmark indexes
- Trump signed an order banning U.S. transactions with eight digital Chinese payment platforms including Ant Group Co.’s Alipay, though it will be up to Biden to decide whether to enforce the policy
- FTSE Russell pulled another three Chinese firms from its indexes to comply with a U.S. order sanctioning companies with military ties following the removal of eight stocks last month
Saudi Arabia surprised the market with a large cut in crude production, an assertion of primacy over the global oil industry that came directly from the kingdom’s de facto ruler
- The additional million-barrel-a-day oil production cut will last two months, and then the supplies will be returned to the market
- Federal Reserve officials shouldn’t intervene to slow rising bond yields because that is expected to happen as the U.S. economy recovers, said Federal Reserve Bank of Dallas President Robert Kaplan
- Fed officials unanimously backed holding the pace of asset purchases steady when they met last month, with some open to “future adjustments” if needed
- China’s stock benchmark topped its 2015 bubble high, marking a recovery from one of the country’s worst equity crashes
- Mexico sold $3 billion in 50-year dollar-denominated bonds at around 3.75%, down from the initial price talk of about 4.15%; demand reached $10 billion. Indonesia also raised $3 billion from selling dollar bonds overseas to fight the worst Covid-19 pandemic in Southeast Asia
- Factory activity across Asia continued to gain momentum, spurred by strong demand for the region’s exports, while China’s recovery is starting to moderate
- The World Health Organization expressed disappointment with China for delaying the travel of experts to the Asian country to investigate the origin of the virus, in a rare instance of public criticism from the international organization
- The experimental vaccine developed by China’s Sinovac Biotech Ltd. was shown to be 78% effective against Covid-19 in late-stage Brazil trials, the most definitive result so far on the shot’s efficacy after previous data sparked confusion and doubt
Asia:
- China’s bond defaults rose to a record $30 billion in 2020, including high-profile enterprises that had previously counted on the implicit guarantees of the state
- China condemned the former chairman of China Huarong Asset Management Co. to death on charges of malfeasance, one of the most severe sentences to stem from President Xi Jinping’s anti-corruption drive
- China sentenced Hu Huaibang, a former chairman of the nation’s biggest policy bank, to life imprisonment on charges of corruption
- There are growing signs that Beijing is keen to slow the ascent in China’s currency after it surged to the highest level since mid-2018 against the dollar
- Hong Kong arrested dozens of opposition figures under a controversial national security law, an unprecedented crackdown that included an American lawyer
- A city of 11 million people near Beijing has been locked down and its residents tested en-masse for the coronavirus amid the worst outbreak in about two months in the country, which has largely contained Covid-19 within its own borders
A bout of foreign selling wiped out gains in South Korea’s benchmark stock index after it topped the 3,000 mark for the first time, though the index has recovered
- The country’s population declined in 2020 for the first time on record as births dropped to a historic low amid the pandemic
- North Korean leader Kim Jong Un told a rare congress of his ruling party he wants to raise defense capabilities to a “higher level” as the nation seeks a new path away from shortcomings that have shaken a sanctions-hit economy
India’s economy is set for its biggest annual contraction in records going back to 1952. Gross domestic product will shrink 7.7% in the financial year ending March 2021
- As major countries such as the U.S. and China race to vaccinate their populations with rapidly approved shots, tens of millions of doses prepared for India are sitting in storage despite having been authorized for use
Indonesia sold a record amount of local-currency government bonds
- Bank Indonesia considers the rupiah to be still fundamentally undervalued and will keep providing ample room for the currency to continue strengthening in line with market mechanisms
- Indonesia will impose stricter movement limits for Java and Bali as the coronavirus outbreak leads to hospitals across the country to fill up
Thailand hopes to avoid a full national lockdown to stem a wave of infections that began in mid-December and has spread to more than 50 of 77 provinces. Prime Minister Prayuth Chan-Ocha this week ordered some businesses to close and curbed travel in the worst-hit regions
- The country will get its first lot of Covid-19 vaccines from China’s Sinovac Biotech Ltd. next month
- Thailand will allow private companies and hospitals to import and sell Covid-19 vaccinations as long as those shots have been approved by the nation’s Food and Drug Administration
- Bank of Thailand said a resurgence in coronavirus infections is raising the odds the economy will expand less than forecast, as authorities curb business and travel to quell the outbreak
- BOT allowed greater flexibility for non-resident companies to conduct foreign-exchange transactions against the baht with domestic financial institutions under its Non-resident Qualified Company Scheme
- Tensions are rising in the largest party in Malaysia’s ruling coalition over whether a general election should be held amid the nation’s worsening coronavirus epidemic
Philippine interest rates will likely remain on hold at least through the first half of 2021 as the economy recovers, central bank Governor Benjamin Diokno said
- Diokno said there’s still “some play” left for the monetary authority to reduce banks’ reserve requirement ratio
- The central bank approved the government’s request for a 540 billion-peso ($11.2-billion) loan
- The government is ready to pay $2.8 billion of foreign debt due in January and the nation can afford not to rush to sell debt overseas, Treasurer Rosalia de Leon said
- The country plans to buy 148 million coronavirus vaccine doses to inoculate more than half of the population this year
- As the world’s pile of negative-yielding debt rose to a record $18 trillion in December, authorities in Taiwan were working hard to keep the government’s bond yield above zero
- Mexico’s first sovereign bond aimed at Taiwanese investors may open the door for other high-grade Latin American countries such as Chile and Peru, according to HSBC Holdings Plc
- Taiwan’s central bank urged the public to help maintain the stability of the FX market, according to a post on its official Facebook page
EMEA:
- Suspected Russian hackers broke into the Department of Justice’s email system and may have also compromised the U.S. federal judiciary’s electronic filing and case management system, authorities said
- U.S. intelligence agencies and the FBI said a major hack of the federal government and some corporations was likely undertaken by Russia -- contradicting Trump’s efforts to suggest China might be responsible -- and “will require a sustained and dedicated effort to remediate”
- Turkey’s year-end inflation rate exceeded even the central bank’s bumped-up forecast, leaving Governor Naci Agbal with little choice but to keep access to credit tight well into 2021
- Turkey’s trade deficit widened 69% to $49.9 billion in 2020, according to preliminary data from the Trade Ministry
- Polish inflation slowed to its lowest level since April 2019, leaving room for the central bank to continue weakening the zloty or further cut interest rates
- The zloty swung back to a level seen as a possible trigger-point for central bank intervention, keeping investors on edge about its true intentions for preventing more gains
- South African government officials have called for stricter measures to curb soaring coronavirus infections at a meeting to discuss the state’s response to the pandemic, according to two people familiar with the matter
- The country reported a record number of new Covid-19 infections, of over 20,000 in 24 hours
- Hospitals in Zimbabwe are reeling from a renewed surge in the coronavirus, with a shortage of beds and equipment threatening to overwhelm the public health system
- Benin is preparing to sell Africa’s first euro-denominated bonds in 2021 to lock in cheaper borrowing costs
- Saudi Arabia, Bahrain, the United Arab Emirates and Egypt agreed to fully restore ties with Qatar, ending a more than three-year dispute that divided the major energy-producing region at a time of heightened tensions over Iran
- Dubai’s biggest bank, Emirates NBD PJSC, sold the first dollar-denominated bonds from the Middle East this year
- First Abu Dhabi Bank PJSC followed its Dubai rival
- Business activity in the Arab world’s two largest economies improved at the end of last year, with Saudi Arabia seeing its strongest expansion in 13 months
- After 2020 setbacks caused by the spread of Covid-19 and lower crude prices, non-oil private sector economies in the United Arab Emirates and neighboring Saudi Arabia still faced job losses as firms adjusted to the challenges of the global pandemic
- Business conditions for Egypt’s non-oil private sector worsened toward the end of 2020 as the pandemic hit demand and triggered an acceleration in job cuts
- Dubai announced the fifth installment of its coronavirus relief package, worth 315 million dirhams ($86 million), bringing the total size of Covid-19 stimulus to 7.1 billion dirhams
Latin America:
- Brazil’s local funds have increased their long positions on the real versus the dollar to $1.6 billion, the highest in a year, and that optimism is helping make the currency one of the most volatile in the world
- Brazilian stocks reached an all-time high Thursday as increased appetite for riskier assets continued to push the benchmark higher after a fifth year of gains
- The nation’s Lower house representative, Baleia Rossi, announced his candidacy for the role of speaker and defended the extension of emergency aid payments to informal workers
- The country posted a $42 million trade deficit in December, compared with an estimated $339 million surplus; Economy Ministry forecasts 2021 exports at $221.1 billion
- Coronavirus death toll in the nation passed 200,000 as the respiratory disease again pummels the Latin American country and a nationwide vaccination plan remains weeks away at best
Mexican migrants sent home a record $40.6 billion in cash last year, up 11% from the previous year
- Mexico reported the highest daily increase in Covid-19 deaths since adjusting its counting strategy three months ago, amid a surge in hospitalizations in the nation’s capital
- Inflation slowed to 3.15% in December, just above target, amid falling energy costs
- Gerardo Esquivel and Jonathan Heath, the first two of President Andres Manuel Lopez Obrador’s nominations to the central bank board, cast dissenting votes to cut interest rates, minutes from the Dec. 17 meeting showed
Argentina’s Entre Rios province was sued in the U.S. for $11.9 million by a group of creditors who claim they’re owed money from a missed interest payment
- The country will issue $7.5 billion dollars in non-transferable 10-year Treasury bills to the central bank
Colombia’s government is said to be reviewing plans to sell a stake in Interconexion Electrica SA that is attracting interest from publicly owned companies
- Consumer prices rose 1.6% year-on-year in December, compared with 1.5% in November
- Bolivia joined Argentina and Venezuela in approving the use of Russia’s Sputnik V vaccine and also recommended China’s Sinovac shot
- Uruguay is planning to sell roughly $500 million in dollar bonds by the end of next month
©2021 Bloomberg L.P.
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