Arab Press

بالشعب و للشعب
Saturday, May 31, 2025

Emerging Markets on Edge as Goldman and Deutsche Bank Flag Risks

Emerging Markets on Edge as Goldman and Deutsche Bank Flag Risks

Emerging markets are heading toward the end of the third quarter with more reasons to be cautious than optimistic.

Developing-nation stocks, currencies and bonds had their worst week in the five days through Friday since the coronavirus pandemic rocked global markets in March. The gap between implied volatility in emerging-market currencies and their Group-of-Seven peers is at the widest since June amid concerns over renewed lockdown measures and delays to further U.S. fiscal stimulus.

Manufacturing reports from China, India, Brazil and South Africa that are being published this week are potentially less decisive for investors than the global sentiment toward risky assets. Investors are bracing for higher price swings around the U.S. November elections, with the first presidential debate between Donald Trump and challenger Joe Biden scheduled for Tuesday.



And they’re being encouraged to move to the sidelines. Deutsche Bank AG is taking a “more defensive stance” on emerging-market credit as it expects increased volatility from the U.S. election to fuel a selloff in risky assets. Never mind that the wave of central-bank stimulus and investors’ hunger for yield had lifted developing-nation dollar debt for five months.

Goldman Sachs Group Inc. is asking investors to put their money into high-yielding currencies, such as the Mexican peso, the South African rand and Russian ruble, but only “once the dust settles.” Expectations for swings in the those currencies against the greenback rose by the most among peers last week.

“With the broad dollar still volatile, and risks still in focus, it is likely too early to engage in fresh longs,” Goldman Sachs strategists, including New York-based Zach Pandl, wrote in a note.

Central banks in India and the Philippines are both forecast to keep interest rates on hold Thursday, as they balance the need for additional stimulus against a backdrop of rising market volatility. Turkey and Hungary unexpectedly increased borrowing costs last week to support their weakening currencies.

Rate Decisions


* Elevated inflationary pressures are likely to constrain the ability of the Reserve Bank of India to ease policy, according to Bernard Aw, principal economist at IHS Markit in Singapore. “We expect the central bank to continue to boost liquidity through other measures, such as cutting the cash reserve ratio,” he wrote in a research note
* The Philippine central bank may lower its benchmark by another 25 basis points, though it’s more likely to move in November or even later to have more impact as the economy reopens more fully, Citigroup Inc. economists including Johanna Chua in Hong Kong wrote in a report
* The Philippine peso is the best-performing emerging-market currency this year, gaining 4.5%, while the Indian rupee has fallen 3%
* Ghana will probably hold its key rate on Monday after the economy contracted less than forecast in the second quarter
* Kenya will also likely keep its interest rates unchanged on Tuesday, while policy makers in Angola will decide on Monday

* On Monday, Colombia’s central bank will release the minutes of its Sept. 25 meeting, when it cut the benchmark rate by a quarter point to 1.75%
* Urban unemployment figures for August, to be released on Wednesday, will probably show that after spiking earlier in the year, the jobless rate has stabilized

Data and Events


* China will release manufacturing numbers on Wednesday that are expected to show the nation’s economic recovery extended into September. The Caixin gauge of manufacturing is due the same day
* Profits at Chinese industrial enterprises grew for a fourth consecutive month, as the country’s factories maintained momentum following the pandemic shutdown
* The yuan has strengthened more than 3% this quarter, beating all its Asian peers
* South Korea will publish industrial production figures on Tuesday and trade data two days later. Exports are likely to see an annual gain in September, the first since the pandemic struck, but that will mainly reflect a higher number of working days rather than improving underling momentum, according to Bloomberg Economics
* The won is the top-performing EM currency after the yuan over the past month
* Malaysia will announce trade data on Monday, while Thailand will publish the same figures on Wednesday along with its current-account balance. Indonesia reports inflation data on Thursday
* Vietnam will report a slew of data on Tuesday, including gross domestic product and retail sales. The economy is one of the few in the region expected to avoid a contraction this year, according to the Asian Development Bank
* Data on Tuesday will probably show South Africa’s unemployment rate surged to a new record in the second quarter as lockdown restrictions forced many businesses to cut jobs to save costs, or close permanently
* The rand was the worst performer among peers last week after the Mexican peso
* Lebanon’s prime minister-designate stepped down on Saturday after failing to form a government, leaving the nation rudderless as it struggles to recover from a devastating explosion at its main port last month
* Saad Hariri, Lebanon’s former premier close to Saudi Arabia, said he won’t be a candidate to form a new government
* The nation’s Eurobonds gained 1.9% this month, the top performer in emerging markets after debt sold by Suriname and Malaysia, according to Bloomberg Barclays indexes
* In Argentina, investors will monitor the release of July economic activity for insight into how social distancing measures, capital controls and debt negotiations affected production. Government tax revenue data for September will be released on Friday
* Markets will continue to react to the imposition of tighter capital controls
* Chile is set to post August unemployment, retail sales and copper production figures on Wednesday as the economy starts to recover from the worst of the pandemic-driven recession. Thursday’s release of economic activity for August will complete the list of growth indicators
* Chile’s peso outperformed all of its emerging-market peers this quarter
* Brazil’s primary budget balance figures, expected on Wednesday, will probably show another month deep in the red, according to Bloomberg Economics. A positive reading of August industrial production data on Friday could help boost optimism for growth

Newsletter

Related Articles

Arab Press
0:00
0:00
Close
Meta and Anduril Collaborate on AI-Driven Military Augmented Reality Systems
EU Central Bank Pushes to Replace US Dollar with Euro as World’s Main Currency
European and Arab Ministers Convene in Madrid to Address Gaza Conflict
Head of Gaza Aid Group Resigns Amid Humanitarian Concerns
U.S. Health Secretary Ends Select COVID-19 Vaccine Recommendations
Trump Warns Putin Is 'Playing with Fire' Amid Escalating Ukraine Conflict
India and Pakistan Engage Trump-Linked Lobbyists to Influence U.S. Policy
U.S. Halts New Student Visa Interviews Amid Enhanced Security Measures
Trump Administration Cancels $100 Million in Federal Contracts with Harvard
SpaceX Starship Test Flight Ends in Failure, Mars Mission Timeline Uncertain
King Charles Affirms Canadian Sovereignty Amid U.S. Statehood Pressure
Iranian Revolutionary Guard Founder Warns Against Trusting Regime in Nuclear Talks
Netanyahu Accuses Starmer of Siding with Hamas
Calls Grow to Resume Syrian Asylum Claims in UK
UAE Offers Free ChatGPT Plus Subscriptions to Citizens
Denmark Increases Retirement Age to 70, Setting a European Precedent
Iranian Director Jafar Panahi Wins Palme d'Or at Cannes
Israeli Airstrike Kills Nine Children of Gaza Doctor
Lebanon Initiates Plan to Disarm Palestinian Factions
Iran and U.S. Make Limited Progress in Nuclear Talks
Trump Administration's Tariff Policies and Dollar Strategy Spark Global Economic Debate
OpenAI Acquires Jony Ive’s Startup for $6.5 Billion to Build a Revolutionary “Third Core Device”
Turkey Weighs Citizens in Public as Erdoğan Launches National Slimming Campaign
UK Suspends Trade Talks with Israel Amid Gaza Offensive
Iran and U.S. Set for Fifth Round of Nuclear Talks Amid Rising Tensions
Russia Expands Military Presence Near Finland Amid Rising Tensions
Indian Scholar Arrested in Crackdown Over Pakistan Conflict Commentary
Israel Eases Gaza Blockade Amid Internal Dispute Over Military Strategy
President Biden’s announcement of advanced prostate cancer sparked public sympathy—but behind closed doors, Democrats are in panic
Mount Lewotobi Laki-Laki Erupts Again, Spewing Ash Cloud over Flores Island
Indian jet shootdown: the all-robot legion behind China’s PL-15E missiles
The Chinese Dragon: The True Winner in the India-Pakistan Clash
Australia's Venomous Creatures Contribute to Life-Saving Antivenom Programme
The Spanish Were Right: Long Working Hours Harm Brain Function
Did Former FBI Director Call for Violence Against Trump? Instagram Post Sparks Uproar
US and UAE Partner to Develop Massive AI Data Center Complex
Apple's $95 Million Siri Settlement: Eligible Users Have Until July 2 to File Claims
US and UAE Reach Preliminary Agreement on Nvidia AI Chip Imports
President Trump and Elon Musk Welcomed by Emir of Qatar Sheikh Tamim with Cybertruck Convoy
Strong Warning Issued: Do Not Use General Chatbots for Medical, Legal, or Educational Guidance
NVIDIA and Saudi Arabia Launch Strategic Partnership to Establish AI Centers
Trump Meets Syrian President Ahmad al-Shara in Historic Encounter
US and Saudi Arabia Sign Landmark Agreements Across Multiple Sectors
Why Saudi Arabia Rolled Out a Purple Carpet for Donald Trump Instead of Red
Elon Musk Joins Trump Meeting in Saudi Arabia
Trump says it would be 'stupid' not to accept gift of Qatari plane
Quantum Computing Threatens Bitcoin Security
Michael Jordan to Serve as Analyst for NBA Games
Senate Democrats Move to Censure Trump Over Qatar Jet Gift
Hamas Releases Last Living US Hostage from Gaza Amid Ongoing Conflict
×