Global Economic Prospects 2015

The global economy is still struggling to gain momentum. Read more ...

Development Prospects

Providing information, analysis, and advice on global trends in the world economy.  Find out more ...

Global Economic Monitor

Now free. Daily and monthly updates on global economic developments and relevant topical issues. Find out more ...

Syndicate content

Prospects Daily: EM equities up at sharpest rate in 2 years

Global Macroeconomics Team's picture

Important developments today:

1. Emerging market equities gained the most in 2 weeks

2. U.S. new home sales surge 17.5% in December 2010 (m/m)


Emerging market equities gained the most in 2 weeks. Developing-country stocks climbed the most since January 12 on Wednesday, as expectations for increasing prices of semiconductors and higher raw-materials prices boosted technology and commodity shares. The MSCI Emerging Market Index gained 0.6% in mid-day trading, heading for the largest gain in two years. The gauge rose from a four-week low, trimming 2011 year-to-date declines to 0.7%. Benchmark stock indexes in China, Hungary, Indonesia, Poland, Russia, South Africa, South Korea, and Thailand all gained more than 1% today. In contrast, Egypt’s benchmark EGX30 index plummeted 6.1%, the biggest decline since November 2009, amid ongoing protests against the government of President Hosni Mubarak. Emerging-market bond spreads over comparable U.S. Treasuries tightened by 8 basis points (bps) to 240 bps today, according to JPMorgan’s EMBI+ Index.

U.S. new home sales surge 17.5% in December 2010 (m/m). Closing off a disastrous year for the homebuilding industry, in which new home sales dropped 12% to the lowest levels since 1963, a 17.5% jump in sales during December was welcome news. This follows last week’s release that purchase of existing homes ratcheted higher at year–end as well, such that the a degree of dynamic is being returned to the market, with buyers taking advantage of low mortgage rates and reduced prices.

The median price of a new home sold during December also picked-up, by 8.5% versus year earlier levels to $241,500; the increase in values probably reflects the change in the mix of sales toward the West of the country were prices are generally higher [see Chart at http://gem or The supply of homes on the market fell to 6.9 months, the lowest since April, at December’s sales pace. “This is consistent with a gradual path of recovery”, notes Drew Matus of UBS Securities.

Among Emerging Markets

In East Asia and the Pacific, in a bid to rein in speculative investment in the domestic property market, China increased the minimum down-payment for houses (other than the primary home) from 50% to 60% today, and simultaneously asked local authorities to release more land for affordable housing construction to ease supply bottlenecks. Home prices in Shanghai surged 26% in 2010 according to SouFun Holdings.

In Latin America and the Caribbean, Mexico's retail sales dipped 0.5% in November from the previous month, as consumers remained shy of increasing spending amidst the economic recovery. While retail spending is 2.4% above what was recorded last year, median market forecasts had expected a rise of 4.3% over November 2009. In Brazil, the benchmark IPCA consumer price index increased to 0.76% in the month to mid-January (m/m) following a 0.7% gain in the previous monthly span. This corresponds to annual inflation of 6.04% for January compared to 5.8% recorded in December, pushing inflation to the top of the central bank's target 2.5-6.5% band. 


Add new comment