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Actionable news in EEM: ISHARES MSCI EMERGING MARKETS ETF,

Emerging Markets Roundup: Oil Flounders, But No Stopping Alibaba!

The latter holds Alibaba, whose annual, one-day shopping promotion produced more stats for the record books, with gross merchandise volume (GMV) settled through Alipay up 39% compared to last year. Shares of Alibaba Group Holding (BABA) were off by 0.3% in early trading.

J.P. Morgan lowered its rating on shares of Brazilian mining giant Rio Tinto (RIO) to Neutral From Overweight. Shares were off more than 1% in opening trading. Shares of Colombian oil producer Ecopetrol (EC) were down 2.7% despite earnings improvements reported last week.

The international price of oil was down fractionally after a deadly earthquake on the Iraq-Iran border. Separate tensions were also mounting over oil pipelines at risk on Saudi Arabia’s border. Middle East stability remains fragile, with more questions about the recent resignation of the former Lebanese prime minister in the Saudi kingdom. The United States Oil Fund (USO) was flat while the WisdomTree Middle East Dividend Fund (GULF) was off by 0.3%.

Brown Brothers Harriman currency strategists Marc Chandler, Win Thin and Masashi Murata note emerging markets currencies were soft last week. Here is an edited version of BBH's note reviewing last week and looking at what to expect from emerging markets this week:

“For the week as a whole, best performers were the Malaysian ringgit (MYR), the Polish zlote (PLN), and Colombian Peso (COP), while the worst were the Brazilian real (BRL), the Douth African rand (ZAR), and Indian rupee (INR). U.S. inflation and retail sales data will likely set the tone for EM. Also, the US fiscal debate is set to continue this week, so expect lots of choppy trading across many markets.
China will likely report October money and loan data this week. October retail sales and IP will be reported Tuesday. The former is expected to rise 10.5% y/y and the latter by 6.2% y/y. Price pressures are picking up, but we not think the PBOC will change policy for the foreseeable future.
Turkey reports September current account data Monday. A deficit of -$4.1 bln is expected. If so, the 12-month total would continue widening to -$39.6 bln, the biggest since August 2015. Turkey is becoming more reliant on hot money flows to finance its external accounts even as investors are turning away from risk.
India reports October CPI Monday, which is expected to rise 3.45% y/y vs. 3.28% in September. If so, inflation would still be in the bottom half of the 2-6% target range. The RBI warned that inflation will move higher and so we see steady rates for now. Next policy meeting is December 6, no change seen then.
Poland reports September trade and current account data Monday. It then reports Q3 GDP Tuesday, which is expected to grow 4.5% y/y vs. 3.9% in Q2. The economy remains robust even as wages are rising. Inflation will likely move higher and require tightening by mid-2018.
Russia reports Q3 GDP Monday, which is expected to grow 2.0% y/y vs. 2.5% in Q2. Growth remains subpar, but low inflation should allow the central bank to continue cutting rates into next year. Next policy meeting is December 15, and another 25 bp cut to 8.0% is likely.
Brazil reports September retail sales Tuesday, which are expected to rise 4.5% y/y vs. 3.6% in August. The economy is picking up nicely even as inflation has bottomed. We see one more 50 bp cut to 7% at the December 6 meeting and then steady rates for much of 2018.
South Africa reports September retail sales Wednesday, which are expected to rise 4.5% y/y vs. 5.5% in August. The recovery remains spotty, and yet the SARB is unlikely to cut rates again at the next policy meeting November 23 ..."

Subscribers can read this week's emerging markets column for more on the possible IPO of the state-owned Saudi Arabian Oil Company: After Arrests, Investors Wary of Aramco Deal.


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