Five Things You Need to Know to Start Your Day
The emerging-market pain continues as a bear market for EM shares looms. China’s savers are turning to a traditional haven in the selloff. And a U.S.-South Korea trade deal may be imminent. Here are some of the things people in markets are talking about.
EM Rout Worsens
The rout in emerging markets showed few signs of abating, even as some of the worst-hit currencies took a breather, as an index of stocks slipped toward bear territory and a basket of currencies traded near its lowest since May 2017. The MSCI Emerging Markets Index of shares extended its slide to 19.7 percent from a January peak. Among the worst-hit stock markets were in Saudi Arabia and Indonesia, where benchmark indexes tumbled by the most in about two years. The Argentine peso and the Turkish lira, which have led global losses this year, eked out gains as the nations took measures to curb the damage. The declines added to concern that investor anxiety is beginning to infect markets whose economies are relatively robust.
China Savers Turn Back the Clock
The hot new thing for Chinese savers is … bank deposits. Shunned for years by the nation’s return-hungry masses, they are suddenly looking attractive again as higher-yielding investments prove riskier than many had anticipated. China’s household deposits rose in July at the fastest annual rate in a year — an influx that analysts say may accelerate after the nation’s stock market sank at the quickest pace worldwide, hundreds of peer-to-peer lending platforms were shuttered and companies defaulted on their debt at an unprecedented rate.
Birthplace of Asian Crisis Now an Emerging-Market Haven
Thailand, the birthplace of the Asian financial crisis two decades ago, has emerged as a haven from this year’s emerging-market rout. The baht has outperformed every other developing-nation currency in the past month as the turmoil began to spread across emerging markets. A large current-account surplus and foreign-exchange reserves, as well as a relatively low level of overseas ownership, have cushioned Thailand. Nomura Holdings Inc. and Aberdeen Standard Investments expect the currency to remain resilient. There’s “low ownership, so little selling,” said Edwin Gutierrez, the London-based head of emerging-market sovereign debt at Aberdeen. “You would need a pretty substantial mega-crisis to trigger a selloff in the Thai baht.”
U.S.-Korea Trade Deal on Track
U.S. President Donald Trump said he has finished negotiating a new trade deal with South Korea and may sign it at the United Nations General Assembly, which convenes this month. “The deal is done,” Trump told reporters at the White House on Wednesday. “It’s been done with South Korea for a long time. It’s been done for about two months. We’ll do a ceremonial signing over the next very short period of time.” The U.S. and South Korea agreed in March to revise their 2012 free-trade agreement, known as Korus. But they still haven’t signed it into law, and South Korean lawmakers have warned that the nation’s parliament won’t pass it if the Trump administration slaps tariffs on Korean cars as part of the president’s threat to protect domestic automakers from global imports.
Path to Brexit Deal Appears to Be Clearer
The British and German governments have abandoned key Brexit demands, potentially clearing the path for the U.K. to strike a deal with the European Union on British exit from the EU, people familiar with the matter said. Germany is ready to accept a less detailed agreement on the U.K.’s future economic and trade ties with the EU to get a divorce deal done, according to people speaking on condition of anonymity because the discussions are private. The U.K. side is also willing to settle for a vaguer statement of intent on the future relationship, postponing some decisions until after Brexit day. The shift means that widespread opposition to U.K. Prime Minister Theresa May’s proposals, known as her Chequers plan, isn’t necessarily a barrier to getting a deal.
What we’ve been reading
This is what caught our eye over the last 24 hours.
- Trump faces organized opposition within his own team, according to an explosive anonymous New York Times op-ed.
- The Kuala Lumpur-Singapore bullet train link won't be a reality for at least a decade.
- A powerful earthquake hits northern Japan, triggering landslides and power outages.
- America’s super-rich have a doomsday escape plan … to New Zealand.
- The crypto world was rocked by a policy change at one of its best-known platforms.
- Tour the vineyard behind some of Australia's best wines.
- These are the world's laziest nations.
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