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Emerging markets could look to a recovery in commodity prices this week, showing that China’s efforts to curb the spread of the coronavirus are working.
Developments in stocks, bonds and currencies in developing countries rose in the five days to Friday as commodities had their best week this year. Chinese officials have called on the nation to meet its 2020 economic targets as Hubei Province, the epicenter of the outbreak, reported a slowdown in new infection rates.
Despite rising assets in emerging markets since late January, equities and bonds in developing countries fell short of expectations. They should close the gap, according to Pictet Asset Management, which manages nearly $ 600 billion in assets.
“Given the current developments, valuations in emerging markets are more attractive than in industrialized countries,” said Luca Paolini, chief strategist at Pictet in London, in an interview.
MSCI Inc.’s emerging equity index rose 1.3% last week to reduce the annual loss to 0.8%. Currencies in developing countries rose for the first time in four weeks, led by the Mexican peso, the South African rand and the Russian ruble. Bloomberg’s commodity price rose for the first time since the week of January 3rd.
The U.S. Federal Reserve released a log of its last meeting on Wednesday. Finance ministers from around the world will gather in Riyadh, Saudi Arabia, from Saturday to discuss the global economy and how to limit the effects of the virus. The Singapore government will give an indication of how the virus will affect Asian economies when it announces its budget on Tuesday. China’s lending rate – the new monthly interest rate – will be announced on Thursday and is likely to be lowered as authorities continue to try to provide cheap cash to businesses and consumers suffering from the virus downs “The focus will be on China for answers that are critical to the region and beyond – how the struggle to contain the coronavirus is progressing, how much of the economy has got going after long periods of inactivity, and how politics is changing. ” Bloomberg Economics said. “We expect key lending rates to drop, and we will look to further measures to support growth.”
Turkey, Indonesia prices
Bank Indonesia is expected to lower its key rate on Thursday as it is one of the noisiest Asian central banks, declaring that it will adopt its policies to counter the economic effects of coronavirus central banks in Malaysia, Thailand and the Philippines and have signaled that they are open to further easing “Asian central banks are trying to stay ahead of the monetary easing curve to support growth as the rapidly spreading disease dampens the economic outlook,” said ING Groep NV economist Prakash Sakpal in Singapore, wrote in a note. “The next person to join the race appears to be the Indonesian central bank.” Indonesia’s economy is vulnerable to the closure of Chinese factories, which will dampen demand for local exports such as palm oil, coal, and copper. China is the country’s main export destination. Deliveries totaled $ 28 billion last year. Although the rupiah has retreated from its two-year high reached at the end of January, it is still the most important currency in Asia this year, with a plus of more than 1.2% against seven of Bank Indonesia. The reverse repo rate for days was 2019 around a total of 100 basis points reduced to 5%. In Turkey, analysts expect central bank governor Murat Uysal to continue cutting rates on Wednesday and move one step closer to the one-digit borrowing costs demanded by President Recep Tayyip Erdogan. This also applies if the aggressive monetary easing has brought Turkish interest rates below inflation. The lira fell 2.9% last month
– With the support of Karl Lester M. Yap.
To contact the editors responsible for this story: Alex Nicholson at [email protected], Justin Carrigan, Paul Wallace
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