It is impossible to make a strategy call on the emerging markets without also making a call on the trade war, the credit/property slowdown in the Middle Kingdom, the resurgence of King Dollar since April, Federal Reserve monetary policy and the slope (flat? Inverted?) of the U.S. Treasury yield curve.
In addition, the prospects of MENA markets are impacted by the plunge in the price of crude oil and gas. The GCC states are all classic petro-economies with the possible exception of Dubai but Egypt’s Saudi remittances, Suez Canal tolls, Sinai LNG export revenues and even Gulf aid prospects all dim when petrodollar revenues fall, as happened in October and November 2018. Politics can help or hurt an individual emerging market. So Brazil’s Bovespa and the real soared at the prospect of right wing maverick Jair Bolsonaro as next President and Lula da Silva blackballed from politics while Mexico’s Borsa and the peso was slammed by the victory of Lopez Obrador as the next El Jefe.
