Vaccine-Led Rally Eases as Infection Numbers Surge: EM Review

Emerging-market stocks and currencies are heading for a second week of gains as news of a vaccine breakthrough added to optimism fueled by the outcome of the U.S. elections. Gains were tempered as the week went on by a surge in global virus infections. Central banks said a vaccine won’t end the economic problems caused by the pandemic.

The following is a roundup of emerging-market news and highlights for the week through Nov. 13:

Highlights:

  • Almost a year into the coronavirus pandemic, the world received a burst of good news, with avaccine developed by Pfizer Inc. showing “extraordinary” results, while an antibody therapy from Eli Lilly & Co. was granted emergency-use authorization in the U.S.
    • California passed the milestone of 1 million infections as the U.S. Centers for Disease Control and Prevention said almost no part of the country is being spared in the surge. Japan saw a record number of infections
    • Brazilreversed its decision to suspend trials of a coronavirus vaccine from Chinese developer Sinovac Biotech Ltd., allowing tests to resume less than 48 hours after being halted amid criticism the initial pause was politically motivated
    • Three of the world’s top central bankers said the prospect of aCovid-19 vaccine isn’t enough to put an end to the economic challenges created by the pandemic
    • The U.S. hasimposed sanctions on four more officials accused of undermining Hong Kong’s autonomy, showing the Trump administration is ready to keep hitting out at China
    • Turkey’s new central bank governor has told lenders he will offerclearer guidance on monetary policy, according to people with direct knowledge of the conversations
    • Peru’s central bank kept borrowing costs at an all-time low to bolster an economic recovery that’s threatened by political turmoil and the pandemic
    Asset moves as of 3:25 p.m. in SingaporeWeekly
    MSCI EM stocks index+0.7%
    MSCI EM FX index+0.08%
    Bloomberg Barclays global EM local currency bond index (up to Thursday)-0.01%

    Asia:

    • China indicated that it wants Australia toimprove strained relations, saying Canberra should know what needs to be done to get ties back on track
      • At least 20 giant bulk carriers are anchored off the Chinese port of Jingtang and unable to offload millions oftons of Australian coal, the latest casualty of the diplomatic row between Canberra and Beijing
      • China’sconsumer inflation threatens to drop below zero in coming months as pork prices reverse trend from last year’s surge
      • Thedefault of a Chinese coal miner has triggered concern over the health of state-owned firms and their lenders
      • Biden assured the leaders of Japan and South Korea of hiscommitment to alliances with the two Asian nations, signaling he will pursue a markedly different strategy from Donald Trump
      • The nation’slabor market took a turn for the worse in October, with the jobless rate rising and employment falling by the most in six months

      Indiaincreased stimulus measures to rescue companies and save jobs. The additional steps amount to about 9 trillion rupees ($121 billion), taking the nation’s total virus relief to almost 30 trillion rupees

      • Retail inflation accelerated to 7.6%, the highest level in more than six years in October, boosting the chances that policy makers will keep interest rates on hold for longer
      • India approved anincentive program of 1.46 trillion rupees to attract companies to set up manufacturing in the nation
      • Prime Minister Narendra Modi’s party, which is in coalition with the ruling alliance in Bihar,retained control of the eastern state after an election battle that went down to the wire
      • Thailand’s government wants the central bank totemper a rally in the baht, which is threatening efforts to boost exports to balance a slump in tourism revenue, according to Finance Minister Arkhom Termpittayapaisith
      • Thailand isbetter placed to weather the economic crisis triggered by the coronavirus pandemic than the Asian financial crisis as the nation’s key financial indicators are stronger, according to central bank Governor Sethaput Suthiwart-Narueput

      Malaysia’s economy contracted at a slower pace in the third quarter, rebounding from a decades-low fall as looser restrictions on movement boosted most sectors

      • Malaysia’s 2021 budget may not have an easy passage through parliament unless the government makes changes to its spending plan, opposition leader Anwar Ibrahim said
      • The country will rely onlocal borrowings to finance next year’s record 323 billion ringgit ($78 billion) spending plan, Finance Minister Tengku Zafrul Abdul Aziz said
      • The government willborrow $300 million to finance the purchase of coronavirus vaccines, President Rodrigo Duterte said
      • The countryshut financial markets and government offices for a day as Typhoon Vamco barreled into the main Luzon island

      EMEA:

      • Turkey’s current account remained in deficit for a10th month amid a deterioration in trade balance and tourism
        • The nationmade it easier for foreign investors to access lira funding, a move that’s aimed at undoing some of the restrictions imposed over the last two years
        • In arush of legislative activity, Hungarian Prime Minister Viktor Orban’s government moved to change the electoral law, enshrine Christian religious doctrine on gender and marriage in the constitution, temporarily ban demonstrations, revamp court procedures and loosen rules governing public funds

        Saudi Arabia’s outlook was cut tonegative from stable by Fitch Ratings as the coronavirus pandemic and lower oil prices clobber the kingdom’s finances

        • The kingdom’s economycontracted for a fifth quarter but the slump eased

        South Africa plans to introduce anew short-dated bond to help lower government borrowing costs by lessening dependence on more expensive long-term debt, National Treasury officials said

        • The nation’s official unemployment rate returned to a17-year high in the third quarter as the easing of a coronavirus lockdown allowed more people to look for work
        • Almost three years after he won control of South Africa’s ruling party, President Cyril Ramaphosa is moving tocement political control and gaining greater leeway to implement unpopular budget cuts and drum up international investment

        Latin America: