marctomarket.com / Dr. Win Thin / December 22nd, 2017
- Fitch upgraded Indonesia by a notch to BBB with stable outlook.
- EU-Poland tensions entered a new phase.
- Cyril Ramaphosa was elected as the new ANC President over opponent Nkosazana Dlamini-Zuma.
- Argentina’s lower house approved President Macri’s pension reform bill.
- Sebastian Pinera won the Chilean presidency in the second round vote.
- Mexico political risk is rising as the PRI slush money scandal widens.
- Peru’s Congress voted not to impeach President Kuczynski.
In the EM equity space as measured by MSCI, Peru (+8.2%), Chile (+7.0%), and Qatar (+5.0%) have outperformed this week, while Korea (-1.5%), Russia (-1.4%), and Mexico (-1.2%) have underperformed. To put this in better context, MSCI EM rose 2.0% this week while MSCI DM rose 0.7%.
In the EM local currency bond space, South Africa (10-year yield -23 bp), Turkey (-15 bp), and Indonesia (-13 bp) have outperformed this week, while Mexico (10-year yield +27 bp), Colombia (+12 bp), and India (+10 bp) have underperformed. To put this in better context, the 10-year UST yield rose 13 bp to 2.49%.
In the EM FX space, ZAR (+3.9% vs. USD), CLP (+2.1% vs. USD), and PEN (+1.8% vs. USD) have outperformed this week, while ARS (-3.0% vs. USD), MXN (-2.2% vs. USD), and THB (-0.7% vs. USD) have underperformed.