Emerging-market stocks gained momentum as they surged for the second consecutive day, driven by rallies across Asian tech stocks and positive signs from Chinese policymakers indicating potential economic stimulus. On December 26, 2024, MSCI’s benchmark Emerging Markets (EM) equity index recorded a 0.3% uptick, aided particularly by notable gains within the Chinese stock market, where shares leapt by 1%. While the index is on track to achieve about 9% total returns by the end of 2024, it still lags behind developed markets, which have observed returns exceeding 20% this year.
Despite the optimism, the path has not been entirely smooth for developing nations. For example, the gauge for EM currencies concluded the day unchanged, resulting in an estimated 0.5% loss on the year. Compounding the uncertainty, several headwinds are looming over these economies, such as President-elect Donald Trump’s potential tariffs, geopolitical tensions, and persistent inflation, causing nerves among investors.
Nevertheless, certain market participants are maintaining their optimism. Investing expert Arnaud Boué from Bank Julius Baer reflected this sentiment, stating, "2025 will bring again volatility, especially when Trump arrives officially in the power seat, but EM companies have very sound fundamentals which will help them navigate this uncertain environment." Boué highlighted the low levels of net leverage and default expectations for companies engaged with the investment-grade and high-yield markets.
On the Chinese front, recent reports from Reuters suggested proactive measures wherein policymakers may issue record treasury bonds amounting to three trillion yuan ($411 billion) to rejuvenate their slowing economy. This news helped propel Chinese stocks upward, resulting in significant gains, including over 16% for the year, as tech giant Taiwan Semiconductor Manufacturing Co. nearly reached its record highs.
Interestingly, the Colombian peso showed resilience as it climbed by 1%, becoming the top-performing developing currency, whereas the South African rand and South Korean won faced declines, attributed to specific local economic factors.
Turning our focus to Nigeria, the country has made headlines for its remarkable return to the international bond market, with its recent Eurobond issuance marking a significant milestone after two years of absence. The Eurobond offering, which closed on December 2, 2024, garnered substantial interest, oversubscribed by $9.1 billion, indicating investor confidence amid the nation’s economic reforms.
The Nigerian government, through its Debt Management Office (DMO), successfully priced $2.2 billion across two tranches of Eurobonds. Specifically, they issued $700 million of the 6.5-year Eurobond maturing in 2031 and $1.5 billion of the 10-year tenure maturing in 2034. The interest rates came at 9.625% and 10.375% respectively, stirring optimism among stakeholders about Nigeria's fiscal health and economic direction.
DMO’s Director-General Patience Oniha expressed contentment with the issuance, emphasizing the broad range of interest from investors globally, spanning the UK, North America, Europe, Asia, and the Middle East. She noted, "The proceeds from this Eurobond issuance will be used to finance the 2024 fiscal deficit and support the government’s budgetary needs." Likewise, Finance Minister Olawale Edun attributed this success to confidence instilled by President Bola Tinubu’s administration through its oversight and reforms aimed at stabilizing the economy.
He remarked, "The broad range of investor appetite to invest in our Eurobonds is encouraging as we continue to diversify our funding sources and deepen our engagement with the international capital markets." Notably, this Eurobond transaction involved reputable financial institutions, including Citigroup, Goldman Sachs, JPMorgan, and Standard Chartered, underscoring the collaborative effort behind Nigeria’s capital-raising initiatives.
Overall, the harmonized story of Nigeria's return to international financing mirrors the larger narrative of growth and optimism among global markets, aligning with the momentum seen across Asian stocks. These developments hint at the increasing confidence of investors, not only within Nigeria but across the spectrum of emergent economies, especially as they navigate through multifaceted economic landscapes.
