Emerging markets start to rebound
Trump’s win trims declines
THE second-worst month of the year for emerging markets neared its end as stocks signalled a rebound from losses spurred by Donald Trump’s US election victory and currencies of oil exporters trimmed November declines.
Dollar-denominated bonds of developing nations headed for their biggest retreat since the so-called taper tantrum of 2013.
The MSCI Emerging Markets index rose for the third time in four days, building on last week’s gain. Russia’s rouble and Mexico’s peso advanced as Opec ministers expressed optimism that a deal to cut output could still be salvaged. Investors lowered the risk premium they demand to own developing-nation bonds for the first time in five days.
The turnaround in emerging market assets comes after Trump’s election as the next US president sparked a rout in global markets on expectations his spending policies would spur inflation and more frequent interest rate increases. Some investors are now betting that the pessimism may have been overdone and the Fed’s next rate move has already been factored into asset prices.
“The worst of the sell-off is over,” said Julian Mayo, the chief investment officer at Charlemagne Capital.
“People are now reassessing what Trump’s presidency could really mean. They are taking the view that the pragmatic businessman in Trump would be a guide to what happens in the next four years and not the one who spoke in dogmatic rhetoric during the campaign.”
A Bloomberg gauge of emerging market eurobonds, comprising sovereign and corporate securities, was poised for a 3.3 percent retreat in November.
Brent crude jumped 8.3 percent after Iraqi Oil Minister Jabbar al-Luaibi said Opec ministers were unanimous in favour of an output cut, following a breakfast meeting in the city on Wednesday. That helped the rouble strengthen 1.5 percent, the best showing among 24 emerging market peers.
Brazilian stock index futures rallied after President Michel Temer’s plan to pull the country out of its worth recession in more than a century