新兴市场货币走弱The MSCI Emerging Markets Equity Index once fell 0.8% and fell for the fourth day in a row, setting the longest losing streak in three weeks.
The Zhitong Finance App noticed that as investors bet that the new US administration led by US President-elect Trump will receive strong support to implement its policies, the US dollar continued to rise, causing emerging market assets to fall on Wednesday.
The MSCI Emerging Markets Equity Index once fell 0.8%, falling for the fourth day in a row, setting the longest losing streak in three weeks. During this period, the index's market value evaporated by $650 billion. Meanwhile, the emerging market currency index hovered at its lowest point in three months, hampered by the dollar rising to a two-year high against a basket of currencies.
Emerging market currencies weaken
With the formation of Trump's cabinet, the performance gap between the US stock market and other stock markets continues to widen, and key positions will be occupied by loyalists preparing to implement the “America First” policy. This raised concerns that the push to raise tariffs would receive support, accelerate inflation, and limit the central bank's ability to cut interest rates.
Mislav Matjeka, head of global equity strategy at J.P. Morgan Chase, said: “A stronger dollar has traditionally been bad for emerging market stock markets. “Without more meaningful fiscal stimulus measures in Asia, emerging markets may still lag behind, especially as trade and tariff uncertainties put pressure on the region.”
According to reports, Trump's cabinet candidates also include famous hawks against China, which increases the possibility that the relationship between the world's two largest economies will deteriorate.
China is also issuing dollar bonds in Saudi Arabia, which will be the country's first time since 2021 to issue bonds in US dollars. According to people familiar with the matter, China will issue three-year and five-year bonds. The initial price guide price is about 25 basis points and 30 basis points higher than the yield on US Treasury bonds, respectively.
South Africa also entered the dollar bond market on Tuesday, raising $3.5 billion in the country's first global bond sale after the May election.
The Bank of Zambia will decide on interest rates later on Wednesday. The bank has maintained a stable policy since it raised interest rates to 13.5% in May.