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Sovereign credit ratings in the emerging markets are back on the up on the bank of hoped-for rate cuts, post-Covid recovery, and policy moves in select markets, Reuters reports. The newswire points to Turkey, Brazil, Nigeria, Zambia and also us here in Egypt as adding to the growing evidence that there’s a turnaround in ratings after decades of downgrades.
Economies are in a very different place than they were during the pandemic: Three-quarters of sovereign credit rating movements in 2024 have been in a positive direction, while almost all were negative when we were all working from home during the pandemic, according to data from the Bank of America cited by Reuters.
The why: It varies by economy, Fitch Ratings’ Ed Parker told the newswire. Some economies have benefited from a recovery following the pandemic and energy price spikes from Russia’s invasion of Ukraine, while others have had a change of fortunes on the back of policy improvements, and frontier economies are reaping the rewards of their new-found access to debt markets, he added.
Good news for sure, but EMs still have a long way to go: Ratings upgrades and better access to debt markets are obviously a positive sign, especially after a long period of high interest rates and a strong USD. But getting too excited about the ratings upgrades risks ignoring long-term trends in developing countries’ debt markets.
MARKETS THIS MORNING-
Major Asian benchmarks slumped into the red this morning after the minutes of the US Fed’s latest meeting were released. Traders and bankers alike are concerned that the central bank is getting “cold feet on possible rate cuts” after data showed inflation was surprisingly stubborn. Of the big Asian indexes, only the Nikkei is in positive territory this morning.
Looking ahead: Nasdaq and S&P futures were up overnight after Nvidia reported record earnings — but futures have the Dow headed for a lower open at the start of trading today. European futures declined overnight.
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ADX |
8,973 |
-0.4% (YTD: -6.3%) |
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DFM |
4,058 |
-0.4% (YTD: -0.1%) |
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Nasdaq Dubai UAE20 |
3,490 |
-0.6% (YTD: -9.2%) |
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USD : AED CBUAE |
Buy 3.67 |
Sell 3.67 |
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EIBOR |
5.2% o/n |
5.5% 1 yr |
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TASI |
12,157 |
+0.3% (YTD: +1.6%) |
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EGX30 |
27,227 |
0.0% (YTD: +9.4%) |
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S&P 500 |
5,307 |
-0.3% (YTD: +11.3%) |
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FTSE 100 |
8,370 |
-0.6% (YTD: +9.7%) |
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Euro Stoxx 50 |
5,025 |
-0.4% (YTD: +11.1%) |
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Brent crude |
USD 81.90 |
-1.2% |
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Natural gas (Nymex) |
USD 2.84 |
+6.4% |
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Gold |
USD 2,4116 |
-1.4% |
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BTC |
USD 69,423 |
-0.5% (YTD: +64.4%) |
THE CLOSING BELL-
The ADX fell 0.4% yesterday on turnover of AED 1.1 bn. The index is down 6.3% YTD.
In the green: National Bank of Umm Al Qaiwain (+3.0%), E7 Group (+2.6%) and Manazel (+2.5%).
In the red: Ras Al Khaimah National Ins. (-10.0%), Abu Dhabi National Takaful (-9.9%) and Abu Dhabi National Co. for Building Materials (-9.9%).
Over on the DFM, the index closed down 0.4% on turnover of AED 582 mn. Meanwhile Nasdaq Dubai fell 0.6%.
