Coverage: Saudi Arabia, Turkey, UAE, Egypt, Nigeria and South Africa
Author: Tanya Rawat
“Winner Winner Chicken Dinner”! The origin of the term lies in Las Vegas where a chicken dinner used to cost less than $2.00 and the usual bet at that time was $2.00, so when you won you had enough for the chicken dinner. Hence “Winner,winner, chicken dinner”!
The week opens with a Risk-On mood as the S&P closed off a third consecutive week of gains, the VIX at year lows of 12.13, dollar regaining strength (Dollar Index at 96 levels), US 10Y Tsy at 2.20 levels after bottoming out last month at 1.80 and Gold falling by 1.40% to $1203 per ounce. While Yellen remains supportive of a 2015 rate hike, a June rate rise is nearly off the table.
This hawkish tone from her is bound to affect Turkey adversely as the past week has been negative for it, as it braces for the upcoming Parliamentary elections in the first week of June. Additionally, Dollar strength is bound to exacerbate its hurt further. Month-to-date the index’s mood has been dictated by the strengthening of the Lira versus the Dollar.
Expect the GCC markets to be spooked by the suicide bombing in KSA and new found dollar strength (negatively affects real estate and tourism sectors).We expect some passive allocation to UAE and Qatar on the MSCI rebalancing happening on the 29th May. Another major event to watch for, is the KSA market opening on the 15th June with the QFI regulations out, an event every market participant would be watching out for.
Egypt is set to continue its euphoria of buying into the market on the back of cancelled Capital Gains Tax. In South Africa, it’s a busy week with quarter-on-quarter (q-o-q) GDP numbers, unemployment data and trade balance numbers in as the Rand teeters and totters in the 11.80-12 range. On 29th May, as Nigeria (Africa’s largest oil exporter) looks to welcome president-elect Muhammadu Buhari in office, the Naira and the stock index have firmed considerably reflecting their confidence in him.
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