Trade Talks to Eclipse All as Nigerian Politics, Emerging-Market Bulls Take a Hit

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The looming U.S.-China trade talks may be set to reveal how complacent traders have been about the dispute just as the rally in emerging markets loses steam.

Last week’s sudden retreat came as representatives from the world’s two biggest economies prepared to discuss the standoff, with President Donald Trump saying he wouldn’t meet his Chinese counterpart Xi Jinping before a 90-day truce ends March 1. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are leading a delegation to Beijing, and if Trump deems that negotiations are moving forward, he may be tempted to extend the deadline. Otherwise, tariffs on $200 billion of Chinese goods will more than double.

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“Sentiment for the rest of the month is likely to be heavily influenced by the ongoing U.S.-China trade negotiations,” said Paul Greer, a London-based money manager at Fidelity International. “While we are still bullish on the asset class based on valuations, technicals and the exogenous environment, we think the market may pause for breath over the coming two to three weeks.”

The MSCI Emerging Markets Index declined last week, ending its longest winning streak in a year. The gauge had finally broken through its 200-day moving average late January, only to be dragged below that level on Friday. The last time the measure fell below the 200-day level was in May, about four months before it sank into a bear market.

China Returns

China reopens after the week-long Lunar New Year holidays, with a flurry of data that will offer clues on how the world’s largest developing economy performed in JanuaryDownbeat trade data due Thursday will reignite concerns over global growth amid the dispute with the U.S.Consumer- and producer-price inflation on Friday will show whether deflation pressures are building up, which could squeeze corporate profitability at home and lead to softer demand for imports. At the same time, the People’s Bank of China may have more scope for further easingFor the yuan, “ongoing talks make a unilateral devaluation very unlikely,” Goldman Sachs Group Inc. strategists including New York-based Zach Pandl wrote in a report

Brazil’s Pension Overhaul

The debate over Brazil’s pension overhaul — a key step in shoring up the nation’s finances — will likely heat up as investors await the government’s proposal to be submitted to Congress. The real is among the top performers in emerging markets this year, spurred in part by optimism the government will fix the bloated pension systemThe plan may be sent to lawmakers the week of Feb. 19 or when President Jair Bolsonaro recovers from surgery, according to an administration official. He’s responding well to new medication aimed at fighting pneumonia, a spokesman said

Pemex Revival

The Mexican government’s plan to revive Pemex will be announced, according to President Andres Manuel Lopez ObradorThe oil giant’s bonds rallied on Tuesday after he said “extraordinary” measures would be unveiled to help the debt-laden company

Politics

Nigerian elections on Saturday are likely to be a neck-and-neck contest between incumbent President Muhammadu Buhari and the People’s Democratic Party candidate Atiku Abubakar, a businessman and former vice presidentYields on Nigeria’s 12-month Treasury bills are near the highest since 2017

Russia’s finance ministry vowed further action to entice fresh capital after Moody’s Investors Service joined two other companies in raising the country’s debt to investment grade; the ruble is the top performer in emerging markets this year

–With assistance from Alec D.B. McCabe, Rita Nazareth and Karl Lester M. Yap.

To contact the reporters on this story: Netty Ismail in Dubai at nismail3@bloomberg.net;Lilian Karunungan in Singapore at lkarunungan@bloomberg.net;Rita Nazareth in New York at rnazareth@bloomberg.net

To contact the editors responsible for this story: Dana El Baltaji at delbaltaji@bloomberg.net, Justin Carrigan

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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Godwin Okafor is a Financial Journalist, Internet Social Entrepreneur and Founder of Naija247news Media Limited. He has over 16 years experience in financial journalism. His experience cuts across traditional and digital media. He started his journalism career at Business Day, Nigeria and founded Naija247news Media in 2010. Godwin holds a Bachelors degree in Industrial Relations and Personnel Management from the Lagos State University, Ojo, Lagos. He is an alumni of Lagos Business School and a Fellow of the University of Pennsylvania (Wharton Seminar for Business Journalists). Over the years, he has won a number of journalism awards. Godwin is the chairman of Emmerich Resources Limited, the publisher of Naija247news.

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