A pedestrian walks past an electronic stock board outside a securities firm in Tokyo, Japan. (Photographer: Keith Bedford/Bloomberg)

EM Review: Stocks Received Late Shot in the Arm From U.S. Data

(Bloomberg) -- Emerging-market stocks ended last week higher and currencies erased losses after the U.S. jobs report on Friday lifted confidence in the world’s largest economy and worldwide growth, boosting the appeal of risk assets.

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The following is a roundup of emerging-markets news and highlights for the week through May 5.

Asset MovesWeeklyApril
MSCI EM stocks index+0.4%+2.0%
MSCI EM FX index-0.01%-0.2%
Bloomberg Barclays Global EM Local Currency bond index+0.1%-1.04%


  • Federal Reserve Chairman Jerome Powell pushed back against pressure for interest-rate cuts from traders and President Donald Trump, saying inflation will rebound and the economy will stay healthy without fresh help from the central bank
  • President Donald Trump over the weekend raised pressure on China to strike a trade deal by announcing he will increase tariffs on $200 billion of Chinese imports to 25 percent from 10 percent. He also raised the possibility of extending a new 25 percent duty on another $325 billion in imports that aren’t currently covered
    • China is considering delaying a trip by its top trade negotiators to Washington this week, according to people familiar with the matter
    • The U.S. and China concluded two days of trade negotiations in Beijing last week, with Treasury Secretary Steven Mnuchin calling the talks "productive"
  • Kim Jong Un oversaw a live-fire military exercise Saturday that potentially included North Korea’s first ballistic missile launch since 2017
    • The U.S. still sees a path toward negotiating a deal with Kim Jong Un to give up North Korea’s nuclear weapons, Secretary of State Michael Pompeo said
  • The first official gauge of China’s manufacturing sector fell in April, signaling that more work is needed to bed down the economic stabilization seen in the first quarter
  • Turkish central bank Governor Murat Cetinkaya sought to dispel concerns that the Monetary Policy Committee had softened its stance on inflation, pledging another round of tightening when needed. The regulator’s outlook for inflation was unchanged
  • Venezuela erupted in turmoil Tuesday when opposition leader Juan Guaido called for a final push to oust President Nicolas Maduro, saying the military was switching sides; by Thursday the call seemed to have failed, with Maduro addressing the nation in Caracas before 4,500 troops in formation
  • The Philippine peso was among the outperformers for the week; the country’s rating was raised one level to BBB+ by S&P Global Ratings, putting the Southeast Asian nation on par with Thailand and Mexico, and ahead of Indonesia
  • The Argentine peso posted the best weekly performance among 22 emerging-market currencies tracked by Bloomberg after its central bank effectively abandoned the non-intervention zone in the currency market


  • The Philippines central bank “definitely” has room to ease monetary policy as inflation slows for a sixth straight month and while the U.S. and Japan are on hold, Governor Benjamin Diokno said
    • Bangko Sentral ng Pilipinas can move “much, much faster” in easing monetary policy after S&P’s upgrade, Diokno told ABS-CBN News Channel separately
    • Philippines aims for higher credit scores after the upgrade, Diokno said
  • Samsung Electronics Co. joined rivals in cautiously predicting a rebound in chip prices in the second half of the year as demand from server-makers picks up
  • Taiwan’s economy grew by 1.72 percent in the first quarter versus the same period a year earlier, slowing less sharply than expected
  • Thailand’s Finance Ministry cut its 2019 economic growth forecast, predicting the slowest expansion in three years as the nation grapples with faltering exports
    • Thailand’s King Maha Vajiralongkorn was crowned in an elaborate ceremony on Saturday, capping a busy period in which he displayed a different approach from his father since taking the throne more than two years ago
    • Official poll results of the March election may be announced from May 7, according to Deputy Prime Minister Wissanu Krea-Ngam
  • Indonesia’s central bank will maintain a "preemptive and ahead-of-the-curve" stance on monetary policy amid lingering risks to stability, according to Bank Indonesia Deputy Governor Erwin Rijanto
    • The government will enlarge the share of bond issuance, compared to multilateral and bilateral loans, to help plug the budget deficit in coming years
    • Foreign direct investment into Indonesia fell for a fourth straight quarter
  • India’s implied real GDP growth in fourth quarter of 2018-19 was lower, Department of Economic Affairs said; Fourth-quarter GDP data scheduled to be released May 31; the rupee was among the best performers as oil prices dropped
    • A senior leader of Prime Minister Narendra Modi’s ruling party forecasts it may fall just short of a clean majority, the first time the prospect of a coalition has been raised as India heads into the final two weeks of its marathon election campaign
  • Malaysia’s Finance Ministry will remain cautious and maintain growth projection for the year, despite Nikkei PMI reading indicating 5.2 percent expansion, Finance Minister Lim Guan Eng says in emailed statement
  • Pakistan’s government removed the governor of the central bank and the head of the tax authority amid the nation’s bailout negotiations with the International Monetary Fund
    • Pakistan appointed IMF economist Reza Baqir as its central bank governor 


  • The Czech central bank raised interest rates a quarter-point to 2 percent, the highest in a decade, as a persistently weak koruna adds to inflationary pressure; the monetary authority signaled a prolonged period of stable interest rates following the decision
  • Turkey’s net international reserves dropped to the lowest level since October, according to Bloomberg calculations and Central Bank of Turkey data
    • The central bank introduced a new swap instrument that will allow it to bolster its international reserves by borrowing gold from commercial lenders
    • Consumer inflation slowed unexpectedly in April in a sign that weak domestic demand is taking its toll on prices; prices rose 19.5 percent in April from a year earlier, compared with an increase of 19.7 percent in March
    • Fitch Ratings held Turkey’s sovereign assessment at BB and kept its negative outlook
    • President Recep Tayyip Erdogan called on the nation’s highest electoral body to have new municipal elections in Istanbul
  • Saudi Arabia’s sovereign wealth fund plans to tap the debt market twice this year to help support the kingdom’s economic transformation plans, CNBC reported, citing its managing director Yasir Al-Rumayyan
  • A gauge measuring sentiment in South Africa’s manufacturing industry rose to a three-month high in April, but has had the worst start to the year since the financial crisis
    • Trade surplus widened in March as exports of mineral products surged. The surplus of 5 billion rand ($344 million) compares with a revised positive balance of 3.87 billion rand in February
  • Inflation in Poland accelerated to the highest in a year and a half, bolstering arguments that the indicator will exceed central-bank forecasts and raise pressure to lift interest rates
  • Kenya’s inflation rate of food and non-alcoholic beverages surged to 8.2 percent in April from 2.8 percent in March, pushing headline inflation to a 19-month high
  • The White House is preparing to designate the Muslim Brotherhood as a foreign terrorist organization, a move that would impose economic and travel sanctions against the group, which won elections in Egypt after the Arab Spring uprising, but was ousted in 2013

Latin America:

  • President Trump sought to keep up pressure on Venezuela’s Nicolas Maduro, stressing that "a lot of options" are open; U.S. Secretary of State Michael Pompeo said military action is possible "if that’s what’s required"
    • Russia’s Foreign Minister Sergei Lavrov told Pompeo in a call that any U.S. intervention and threats against Maduro’s regime constitute "a gross violation of international law" and may result in "the most serious consequences"
    • Opposition leader Juan Guaido said he cannot rule out the option of the U.S. military working with his nation’s armed forces to oust Maduro, telling the Washington Post that such an offer from the Trump administration would have to be voted on in the parliament he leads
  • Argentina’s central bank overturned a previous pledge not to intervene if the peso remained within a trading band after the currency hit a record low in April and bonds fell deep into distressed territory; new measures could help "prevent excess volatility,” according to JPMorgan Chase & Co.
    • Central bank stopped publishing its daily buy-sell transactions for U.S. dollars to keep its FX strategy out of public scrutiny, according to a person with direct knowledge of the decision
  • Brazil’s pension reform will require further concessions to pass, but should ensure savings close to the government’s target, according to the head of a congressional committee that’s next to debate the investor-backed bill
    • The reform will likely save Brazil 900 billion to 1 trillion reais ($227 - $252 billion) over 10 years, Marcelo Ramos, president of the lower house’s special committee on pension reform, said
    • Brazil’s industrial production fell more than almost all analysts expected in March, increasing odds that Latin America’s largest economy contracted in the first quarter
  • Petroleos Mexicanos, the country’s state-owned oil company, saw first-quarter revenue shrink despite an increase in oil prices as output fell 12 percent from the same period a year earlier
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