Emerging markets ended a volatile quarter with China’s plunging economy, spiking US yields and rising oil prices sparking the worst decline in stocks in a year.
Despite a rebound on Friday, stocks saw a $470 billion wipeout, currencies posted back-to-back quarterly losses and sovereign risk premiums hovered at a three-month high.
It’s now clear that expectations at the start of the year for a rally in Chinese markets and outperformance by emerging markets over developed markets have not panned out.
What is less clear is what the last stretch of 2023 holds, as investors assess whether the worst of bad news in those key themes is over.
China’s economy is stabilising, Brent crude prices may be peaking and a resurgent dollar stalled after reaching a 10-month high.
What’s more, weak US consumer spending data and a slower-than-expected increase in the Fed’s preferred measure of inflation have spurred hopes that US rate hikes may halt.
“The EM rates and EMFX carry trade has been derailed by the relentless move up in US rates,” Citigroup strategists including Dirk Willer wrote in a note to clients.
“With US rates trading as if they still are in a bear market, we are cautious in the short term until we see signs of US weakness.”
MSCI’s stock index rose 0.8 per cent on Friday as Chinese technology stocks came back in favour. That trimmed quarterly losses to 3.7 per cent, its worst performance in a year.
The currency gauge also ticked up on the last trading session of September, with Chile’s peso, Hungary’s forint and Thai baht leading gains. It ended the quarter 0.4 per cent lower, a second straight decline.
Mexico’s peso was supported by a hawkish tone when policymakers held interest rates steady on Thursday, feeding expectations that the country may be the last in the region to lower borrowing costs.
Colombia’s central bank also held interest rates at a quarter-century high on Friday, though economists are expecting a cut next month.
In China, where stocks have erased $1.7 trillion of shareholder wealth since early February, satellite data show an economic rebound is at last taking hold. Recent releases showing an improvement in industrial profits have boosted bets for the start of a new earnings cycle.
US labour market trends will play a key role in the Fed’s calculation of a peak rate. Resilience in employment data in the face of successive rate hikes has been one of the surprises of the year and kept inflation expectations buoyed.
While Fed policymakers left the target range for their benchmark rate unchanged, fresh quarterly projections showed 12 of the 19 officials favoured another hike in 2023.
Moves in US yields and the dollar will track developments in these two themes. Any strength in them could filter through to emerging markets as another sell-off.
But investors will hope the recent signs of exhaustion in the US asset rallies continue, sparking a fourth-quarter rebound.
SHAITTAN
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Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
How to register as a donor
1) Organ donors can register on the Hayat app, run by the Ministry of Health and Prevention
2) There are about 11,000 patients in the country in need of organ transplants
3) People must be over 21. Emiratis and residents can register.
4) The campaign uses the hashtag #donate_hope
Wicked: For Good
Director: Jon M Chu
Starring: Ariana Grande, Cynthia Erivo, Jonathan Bailey, Jeff Goldblum, Michelle Yeoh, Ethan Slater
Rating: 4/5
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Milestones on the road to union
1970
October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar.
December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.
1971
March 1: Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.
July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.
July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.
August 6: The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.
August 15: Bahrain becomes independent.
September 3: Qatar becomes independent.
November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.
November 29: At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.
November 30: Despite a power sharing agreement, Tehran takes full control of Abu Musa.
November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties
December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.
December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.
December 9: UAE joins the United Nations.
New UK refugee system
- A new “core protection” for refugees moving from permanent to a more basic, temporary protection
- Shortened leave to remain - refugees will receive 30 months instead of five years
- A longer path to settlement with no indefinite settled status until a refugee has spent 20 years in Britain
- To encourage refugees to integrate the government will encourage them to out of the core protection route wherever possible.
- Under core protection there will be no automatic right to family reunion
- Refugees will have a reduced right to public funds
Going grey? A stylist's advice
If you’re going to go grey, a great style, well-cared for hair (in a sleek, classy style, like a bob), and a young spirit and attitude go a long way, says Maria Dowling, founder of the Maria Dowling Salon in Dubai.
It’s easier to go grey from a lighter colour, so you may want to do that first. And this is the time to try a shorter style, she advises. Then a stylist can introduce highlights, start lightening up the roots, and let it fade out. Once it’s entirely grey, a purple shampoo will prevent yellowing.
“Get professional help – there’s no other way to go around it,” she says. “And don’t just let it grow out because that looks really bad. Put effort into it: properly condition, straighten, get regular trims, make sure it’s glossy.”
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
ENGLAND SQUAD
Joe Root (c), Moeen Ali, Jimmy Anderson, Jonny Bairstow, Stuart Broad, Jos Buttler, Alastair Cook, Sam Curran, Keaton Jennings, Ollie Pope, Adil Rashid, Ben Stokes, James Vince, Chris Woakes
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
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UAE currency: the story behind the money in your pockets
