"Because of continuing Covid-19 disruption, the recovery in emerging-market growth will, of course, be a stop-start one," said Hasnain Malik, the Dubai-based head of equity strategy at Tellimer. "But pauses in emerging-market equity performance, particularly in Asia, should be viewed as opportunities."
A slew of economic output data from countries including South Korea, Poland and Mexico this week will give further evidence of the damage from the pandemic. Excluding China, emerging-market activity fell to about 77 per cent below its pre-virus level in the third week of January, according to Bloomberg Economics estimates.
Investor anxiety, as measured by implied volatility for currencies and stocks, jumped on Friday by the most in about two weeks. Just 24 hours earlier, optimism over additional U.S. stimulus under President Joe Biden had helped drive a gauge of developing-nation equities to an unprecedented high.
Tensions between the world's two largest economies may also be on the radar this week, with the U.S.-China Economic and Security Review Commission due to hold a hearing on Thursday. The commission is mandated by Congress to report annually on the national security implications of the economic relationship between the two countries.
As the focus shifts away from U.S. politics and more governments impose lockdowns to fight the spread of Covid-19, several countries are set to report fourth-quarter growth data
Bloomberg Economics expect South Korea's gross domestic product data to come in significantly below consensus, arguing that private consumption will be the main drag on growth, as the year-end virus surge and tightened social distancing measures weigh on incomes and spending
The won has been emerging Asia's worst-performing currency so far this year
Figures from the Philippines on Thursday are expected to show continued significant year-over-year contraction
The data may come in below consensus because of "prolonged movement restrictions and limited fiscal support," according to Bloomberg Economics. In addition, a spate of strong typhoons in October and November likely added further downward pressure
Taiwan's data will be released on Friday, with economists surveyed by Bloomberg expecting a 3.45 per cent year-over-year rebound for the fourth quarter
The numbers will be buoyed by "strong export performance, while private consumption also rebounded, in part thanks to the government's cash vouchers and tourism subsidies," according to Barclays
The authorities' battle against local-currency appreciation continues, with a clamp down on grain companies and their banking partners
December industrial production numbers are also due on Monday, with the consensus expecting the year-over-year rate to cool
Poland's gross domestic product published on either Wednesday, Thursday or Friday is forecast to have contracted 2.7 per cent in 2020, compared with a 4.5 per cent expansion the year before
A preliminary reading of Mexico's fourth-quarter gross domestic product on Friday will probably show the economy is recovering, while remaining below pre-pandemic levels
Mexican President Andres Manuel Lopez Obrador said he's infected with Covid-19 after the country posted record increases in cases and fatalities from the outbreak in the past week
Central Banks Decide
Hungary's central bank is predicted to leave its benchmark rate unchanged at 0.6 per cent on Tuesday
The forint is the best-performing emerging-market currency this year
Policy makers in Colombia will probably leave interest rates on hold on Wednesday during their first meeting under new central bank Governor Leonardo Villar
Bloomberg Economics expects the decision to be split, as it was in December, with a few policy makers voting for a 25 basis-point cut
While Chile's central bank is expected to keep its key policy rate steady on Wednesday, investors will be watching for any hint on the future path of policy
What to Watch
Vietnam's twice-a-decade National Congress kicks off on Monday. Bloomberg economics expects the leaders to allow more flexibility in the dong's exchange rate
Russian assets may be under pressure after supporters of opposition leader Alexey Navalny held the country's biggest anti-Kremlin protests since at least 2018
The ruble was the worst performer after Brazil's real on Friday as oil prices declined
Turkey will hold exploratory talks with Greece in Istanbul on Monday as the two countries seek to defuse years of conflict over sovereignty and energy rights
South Korea's January consumer confidence is out on Wednesday. The lockdown may have continued to impact sentiment, which slumped in December
Note that the average Goldman Sachs lockdown index for the country had risen an average 6.7 points to Jan. 15 from December's average
Industrial production numbers will be released on Friday. Consensus expects continued improvement in seasonally adjusted month-on-month terms, as demand for tech products remains robust
The Philippines' December trade data Wednesday are likely to show a continued deficit and slow recovery in export growth
China's industrial profit growth for December is forecast to show continued rapid expansion; the data is due on Wednesday
The figures may have shown the second-biggest increase since July 2018, according to Bloomberg Economics. This would reflect a pickup in production, double-digit growth in exports and narrower producer price deflation. A lower year-earlier base may also benefit the reading
Official PMIs are out on Sunday, with consensus expecting both manufacturing and services to cool
The Chinese authorities continue to battle yuan appreciation with weaker-than-expected fixings and state-bank buying of dollar-yuan; the yuan remains the strongest-performing Asian currency in 2021 so far
The Thai manufacturing production index for December is likely to come in close to flat after trade data on Friday surprised with exports rising more-than-expected
Current-account numbers are due on Friday, and are likely to show a continued deficit of about $1 billion
Malaysia trade data will be released on Friday and are expected to show a near record surplus of about 25 billion ringgit, according to economists surveyed by Bloomberg
Russia's industrial output due Monday is likely to show a further contraction in December from a year earlier
South Africa's trade balance data for December published on Friday are set to show the country's surplus narrowed
The rand is one of the worst-performing currencies this year
Data due Friday will probably show that Turkey's trade deficit narrowed in December
Goldman Sachs revised its forecasts for the Turkish currency again, projecting further gains in the near term but warning that "the extent of lira appreciation may be limited"
A release of Mexico's November economic activity index on Monday and retail sales on Tuesday may also add fresh evidence of the country's economic rebound
Readings of Chile's December retail sales, unemployment and copper production in be released on Friday
In Brazil, investors will scrutinize a reading of the bi-weekly consumer-price index on Tuesday for further evidence of a pick-up in inflationary pressures after the central bank adopted a more hawkish tone last week
December's primary budget-balance figures are due a day later; national unemployment data for the same month come on Thursday
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