Bloomberg
Published Mar 28, 2021 17:09
Updated Mar 28, 2021 18:18
(Bloomberg) -- A recovery in the world’s second-largest economy could lend support to emerging markets after a rocky week that saw equities wipe out almost all of their annual gains and the Turkish lira tumble anew.
Data from China, set to be published on Wednesday, will probably show a rebound in both the manufacturing and non-manufacturing sectors, supporting the broader backdrop of improving global growth. Meantime, the developing world’s better corporate outlook may lure investors to buy the dip.
Last week, MSCI Inc.’s developing-nation stock index slumped amid declines in Turkey, Argentina and China. A selloff in the Turkish lira sent emerging-market currencies to their fifth loss in six weeks, and dollar bonds also edged lower. The recent weakness is encouraging stock-picking in some developing nations that are poised to rebound. Strategists at Goldman Sachs Group Inc (NYSE:GS). tout attractive valuations in South Africa and Russia while others favor China.
“The pickup in U.S. yields, the slightly stronger U.S. dollar and Europe’s hapless vaccination rollout have hurt EM, but valuations are again looking interesting in China technology,” said Hasnain Malik, head of equity strategy at Tellimer in Dubai. “And for those prepared to look beyond Covid disruption, commodity exporters and tourist destinations offer great opportunities.”
One of the lingering questions for emerging-market investors is whether the meltdown in Turkey worsens or spills over into other countries. So far, the contagion has been limited. There’s also the ongoing drama in the Suez Canal, which could weigh on oil markets for days to come.
Turkish Lira’s Wild Ride Has Banks Axing Forecasts for Guesswork
What to Watch
Key Events and Data
FTSE Russell Decision
FTSE Russell will announce Monday whether Malaysia remains in its World Government Bond Index after putting the nation on a watch list for potential exclusion two years ago. Since then, the central bank has stepped up measures to address investors’ concerns on market liquidity after a ban on trading of non-deliverable forwards in 2016
The bond index will probably confirm China’s inclusion, including details on the country weight
China will publish gauges of manufacturing service activities for March on Wednesday while South Korean data on February industrial production is also due
Traders will monitor Chile’s unemployment, retail sales and copper production figures on Wednesday, as well as a reading of economic activity on Thursday
©2021 Bloomberg L.P.
Written By: Bloomberg
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