EM Review: Vaccine Optimism Powered Risk Assets to Weekly Gain

Emerging-market equities and currencies last week rose for a third week amid optimism over progress toward a coronavirus vaccine. Moderna Inc. and Pfizer Inc. announced promising clinical trial results just as countries from the U.S. to Japan imposed stricter restrictions to combat rising infections. Turkey’s central bank raised interest rates, boosting the lira, while authorities in Indonesia and the Philippines unexpectedly cut borrowing costs and South Africa held rates unchanged.

The following is a roundup of emerging-market news and highlights for the week through Nov. 22:

Click here for our emerging-markets weekly preview and listen here to our weekly podcast.


  • Moderna said its Covid-19 vaccine was 94.5% effective in a preliminary analysis of a late-stage clinical trial. Pfizer said a final analysis of trial data showed its Covid-19 vaccine was 95% effective, paving the way for it to apply for U.S. regulatory authorization
  • U.S. states imposed new restrictions following a surge in cases that led health officials to warn about the prospect of uncontrollable outbreaks
    • Two of President-elect Joe Biden’s coronavirus advisers said they favor targeted local measures to stem the pandemic and oppose a nationwide U.S. lockdown as too blunt
    • Federal Reserve Chairman Jerome Powell said the U.S. economic recovery is likely to continue at a “solid” pace yet risks losing momentum as the virus spreads
    • In a rare moment of discord, Powell and Treasury Secretary Steven Mnuchin clashed over whether to preserve emergency lending programs designed to shore up the economy
  • Mexico reported 576 new Covid-19 deaths Thursday, making it the fourth country where the toll from the virus has surpassed 100,000. India hit 9 million total cases, while the number of infections in Russia surpassed 2 million, pushing its hospital system to the brink
    • Brazil reached 6 million coronavirus infections amid growing signs the spread is accelerating in what was already one of the world’s hardest-hit nations
  • The U.S. Securities and Exchange Commission is pushing ahead with a plan that threatens to kick Chinese companies off U.S. stock exchanges
  • President Xi Jinping pledged that China wouldn’t engage in decoupling, just days after the region inaugurated the world’s largest free-trade agreement
    • President-elect Joe Biden isn’t likely to quickly unwind the tariffs President Donald Trump has imposed on Chinese imports, said Delaware Senator Chris Coons, a close ally of the incoming leader
  • Turkey’s central bank took a major step back toward mainstream policy making by raising rates by the most in more than two years
  • Indonesia’s central bank cut its policy rate for the first time in four months, aiming to support the economy’s recovery
  • The Philippine central bank lowered its key rate after the economy contracted more than expected in the third quarter
  • South Africa’s central bank held its benchmark interest rate for a second straight meeting as it raised its forecast for gross domestic product
    • South Africa fell deeper into junk territory after Moody’s Investors Service and Fitch Ratings lowered the country’s credit ratings on Friday
  • Nigeria, Africa’s largest economy, has slumped into a recession in the third quarter as oil production dropped to a four-year low
  • Saudi Aramco returned to the debt markets for the first time since April of last year, selling $8 billion of bonds to help fund the world’s biggest dividend
  • Peru’s new interim President Francisco Sagasti vowed to defend fiscal stability in the face of demands for higher government spending, signaling he’ll resist populist economic measures from congress
  • Emerging-market exchange-traded funds attracted investors in the week to Nov. 13, pushing the two-week inflow to the largest since January
  • The world’s richest economies could reach a consensus soon to increase International Monetary Fund resources in what could be a landmark agreement to help developing countries that has faced opposition from the U.S.
Asset moves last weekWeekly
MSCI EM stocks index+1.8%
MSCI EM FX index+0.7%
Bloomberg Barclays global EM local currency bond index+0.7%


  • China’s economic rebound gathered pace in October, cementing the nation’s status as the only major economy tipped to grow this year
    • The yuan climbed to the strongest level in more than two years
    • China’s market regulator expanded its investigation into bond sales for a state-backed coal miner that unexpectedly defaulted on payments this month, dragging in a number of banks, rating and accounting firms
    • China priced its first euro-denominated bond sale in about a year, after taking advantage of ultra-low borrowing costs to help pare its reliance on dollar debt
    • China gave one of its most detailed explanations yet for souring ties with Australia, calling on the nation to stop trying to impose its will on others
    • Chinese lenders suspended $2.1 billion in debt repayments from nearly two dozen nations
  • Global funds have bought the most South Korean bonds this year since 2010, a testament to the securities’ appeal as a haven and yield play
    • South Korea is closely monitoring the currency market and will take steps if needed, Finance Minister Hong Nam-ki says in a government meeting.
  • India’s capital is in a Covid-19 crisis with a surge in new infections even as the country’s overall numbers have dipped
    • The U.S. will soon issue the results of probes into Austria, Italy and India’s decisions to tax local revenue of Internet companies such as Facebook Inc., which could pave the way for retaliatory tariffs, people familiar with the situation said.
  • Indonesia’s current-account surplus was 0.4% of GDP in the third quarter, its first since the July-September period in 2011
    • While Indonesia is past the worst of the Covid-19 pandemic, risks remain and weak consumer confidence is a major hurdle to reviving businesses and growth, according to the nation’s finance minister
    • Bali is seeing a pick-up in activity as its governor continues debating when and how the island can reopen to international travelers
  • Thailand will ease rules on capital outflows to cool a currency rally that’s threatening to derail a rebound in exports and the economy’s recovery from the pandemic

    • The Bank of Thailand signaled it will focus on tackling a rally in the nation’s currency, while keeping its benchmark rate unchanged for a fourth meeting
    • The Thai economy improved in the third quarter after the government implemented a series of stimulus measures and eased restrictions on movement
    • Thailand’s parliament rejected a push by pro-democracy groups for a constitutional amendment to reduce the powers of the nation’s monarchy; anti-government protesters in Thailand are planning to expand their set of demands
  • The Philippine central bank said it reduced its purchases of government bonds as the market stabilized following disruptions earlier in the year due to the pandemic
    • Philippine Finance Secretary Carlos Dominguez said he doesn’t see a need for outsized government borrowings
    • Philippines central bank Governor Benjamin Diokno said there’s a limit to what monetary policy can do to stimulate the economy amid the pandemic, pitching for a “whole-of government approach” a day after cutting key rate to a record low
  • Malaysia’s economic recovery will likely be more U-shaped than V, dampened by renewed restrictions amid a resurgence of coronavirus infections, according to Trade Minister Azmin Ali

    • Former Malaysian prime minister Najib Razak is asking a U.S. court to let his lawyers seek documents and testimony from Goldman Sachs Group Inc. to help in his defense against criminal charges over the 1MDB scandal
    • Malaysia will end the conditional movement control order in states of Melaka, Terengganu and most of Johor and Kedah from Nov. 21
  • Taiwan’s Deputy Minister of Economic Affairs and the U.S. Assistant secretary of the Treasury for International Markets held initial talks on plans for joint overseas infrastructure investment


  • The lira and Turkish stocks rallied after the central bank raised its key rate, fueling speculation President Recep Tayyip Erdogan will make good on a pledge to return to market-friendly policies
    • Foreign investors purchased a net $908 million in Turkish equities and bonds in the week through Nov. 13, following changes to the country’s top economic management
    • President Recep Tayyip Erdogan said Turkey’s main objective is to reduce interest rates as inflation slows to official medium-term targets; he called on the European Union to keep its promises to Turkey and avoid discrimination as the threat of EU sanctions looms over the country
    • Turkish regulators are planning to make it more attractive for commercial banks to hold lira deposits to help foster confidence in the currency
  • Russia will be able to restrict access to Twitter Inc., Facebook and Alphabet Inc.’s YouTube under a draft law
  • European Union leaders made no progress in bridging their divisions over a stimulus package casting doubt over the disbursement of funds for the bloc’s battered economies
    • The EU pledged to draw up more sanctions against Belarus as a result of President Alexander Lukashenko’s continued crackdown on protesters
  • Czech lawmakers authorized the government to maintain the nationwide lockdown for three more weeks

  • Poland won’t allow women-led street protests to trigger a “revolution,” a senior government official said, after police cracked down on a demonstration for abortion rights
    • Poland will allow shopping malls to reopen, while keeping restaurants, cinemas and schools closed
  • The turmoil surrounding Lebanon’s financial collapse deepened on Friday after an international firm quit its contract to audit the central bank’s accounts, a key step in unlocking billions of dollars in aid
  • The United Arab Emirates ratcheted up tension with oil allies in OPEC+, with officials privately questioning the benefits of being in the producers’ alliance and even considering whether to leave it
  • Saudi Arabia’s sovereign wealth fund cut its holdings of U.S. equities in the third quarter by $3 billion to $7 billion

    • The world’s biggest oil exporter has set its sights on also becoming the largest supplier of hydrogen
  • Zambia’s Finance Minister said creditors were at least partly to blame for the country defaulting on one of its Eurobonds, while a group of bondholders said the missed payment risked setting a more adversarial backdrop for debt negotiations

    • The Bank of Zambia kept its key rate at a record low to allow the impact of previous cuts to filter through the economy
  • South Africa’s government will get its finances back on track and avoid a sovereign debt crisis, according to President Cyril Ramaphosa
    • South African police clashed with about 1,200 supporters of the opposition Economic Freedom Fighters party on Friday who were protesting against alleged racism at a Cape Town school
  • Ethiopia’s government ratcheted up economic pressure on the rebel Tigray state in a bid to cow it into submission after two weeks of fighting
  • Zimbabwe President Emmerson Mnangagwa unveiled a new five-year economic plan that he said is expected to deliver expansion of more than 5% through 2025
  • Nigerian inflation quickened for a 14th month in October
    • Nigeria dismissed an investigative report by CNN alleging that its security forces killed unarmed protesters last month in Lagos

Latin America:

  • Peru’s interim president appointed economist Waldo Mendoza as his finance minister

    • George Forsyth, a former goalkeeper with Peru’s national soccer team, topped voter preferences with 16% support in an Ipsos poll ahead of April’s general election
    • In the final hours of Manuel Merino’s six-day period as President of Peru, he signed a law allowing a second round of withdrawals from private pension funds
    • Peru’s economy grew 29.9% in the third quarter from the April-June period, the fastest pace on record
  • Brazil’s central bank signaled it will step in to support the real through foreign-exchange swaps if there are strong outflows by the end of the year
    • Central bank officials reinforced views that inflation shocks are transitory and do not threaten plans to hold the interest rate at a record low
    • Fitch Ratings affirmed Brazil’s sovereign rating at BB- and maintained a negative outlook
    • President Jair Bolsonaro emerged weaker from Nov. 15 municipal elections that were widely seen as a referendum on the first half of his four-year mandate
    • The nation’s main exchange decided to allow trading on all assets on holidays in Sao Paulo
    • Street protests swept across Brazil and shops were looted after a video went viral showing grocery store security guards beating a Black man to death
  • Mexico won approval from the International Monetary Fund to maintain its flexible credit line at $63.4 billion amid the global pandemic, bucking the reductions taken in recent years, according to three people familiar with the talks
    • The government threatened to cut cooperation with the U.S. after the surprise arrest of its former defense minister in Los Angeles; a federal judge in Brooklyn agreed to the charges being dropped
    • The treasurer of Mexico’s Finance Ministry, an entrepreneur and a career Banxico director are the three women seen as the top candidates to fill a key seat on the board of the country’s central bank
    • Mexico’s Senate approved a bill to decriminalize the use of marijuana in a country beset by decades of corruption and violence tied to the illegal drug trade
  • Chile’s economy grew 5.2% in the third quarter, more than expected, as policy makers increased stimulus and rolled back lockdowns

    • Chile’s current-account deficit was significantly smaller than expected in the third quarter
  • Argentina’s Chubut Province reached an agreement in principle with a majority of bondholders, making it the country’s second province to reach a debt deal after the national government restructured $65 billion
    • A group of creditors representing holders of Neuquen Province’s 2025 bonds accepted a proposal to restructure the notes
    • Argentina’s provinces are moving forward with debt agreements that, analysts caution, may prove challenging to service
  • Colombia’s GDP rose 8.7% in the third quarter, rebounding from its deepest slump on record
  • Ecuador’s left-wing presidential candidate Andres Arauz said he will disregard the $6.5 billion deal with the IMF if elected
    • Ecuador has identified alternatives to $1.7 billion in planned Chinese loan disbursals for 2020, President Lenin Moreno said
  • Guatemala will pay roughly $35 million to Teco Guatemala Holdings in full in the coming days to lift an embargo on frozen accounts in New York, Finance Minister Alvaro Gonzalez Ricci said

    • S&P said it may cut Guatemala’s BB- rating and Fitch put the rating on negative watch
  • The Republic of Suriname sent a consent solicitation to holders of $675 million in dollar bonds maturing in 2023 and 2026, asking to defer payments due this year until 2021
    • The International Monetary Fund said it is in talks with Suriname after the government requested financial support
  • Bolivia’s international reserves fell to $5.2 billion on Nov. 13, the lowest level since 2007
  • Puerto Rico approved pitching bondholders on a new restructuring offer to restart negotiations over how to reduce $18 billion of debt
Upcoming data and economic releases:
  • For Asia, click here
  • For Eastern Europe, click here
  • For Latin America, click here

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