Indications are rife that Nigeria is the worst performing among the Emerging Markets in 2016, which has fallen 40 per cent this year following a long-delayed devaluation and the economy’s slide into recession.
This is even as trading on the emerging stocks hit twoweek highs on Friday and were set to end 2016 in the black for the first time since 2012 Sovereign dollar bonds have returned around 9 per cent, with average yield spreads over U.S. Treasuries having contracted around 75 basis points over the year.
Top-performing rouble tumbled 2 per cent on fears of fresh political strains between Russia and the United States. However, there were jitters about China, where the yuan has fallen almost 7 per cent, its biggest annual loss since 1994, the year it started trading.
Fears are growing of spiralling capital outflows that could deplete sovereign coffers and cause a crisis in the highly indebted economy.
Broadly though, after three years of weakness caused by slowing economic growth and a stronger dollar, emerging markets found buyers in 2016, even if some of them vanished after Donald Trump’s victory in the U.S. presidential election on Nov. 8.
MSCI’s emerging equity index has risen 8.5 per cent this year, led by Russia and Brazil, whose currencies too have appreciated the most, up around 20 percent versus the dollar .
The rouble fell 2 per cent on Friday, however, as traders booked profits from the currency’s run to 14-month highs after the United States imposed sanctions on Russian intelligence agencies over their alleged involvement in hacking U.S. political groups during the 2016 election Russia has threatened titfor- tat measures.
South Africa’s rand fell almost 1 per cent against the dollar, reversing part of the advances seen in the past five sessions that were driven by fresh commodity price gains.
South Africa along with Turkey is one of the weak spots in emerging markets, with slow progress on reforms and sluggish growth.
Latest data showed private sector credit demand had dropped sharply, with Thomson Reuters data showing this was the lowest in more than five years.
The Turkish lira slipped slightly after data showing a slightly narrower trade deficit for November and is on course to end the year with losses of around 17 per cent, a fourth year of losses against the dollar.
Less developed or “frontier” equity markets have lost around 2 percent on the year, lagging their bigger counterparts.
But the headline number masks strong performance in some countries, with Pakistan topping the list with a rise of over 30 per cent: tmsnrt. rs/2dYsJmH