Written from my colleague Dr. Win Thin

In the EM equity space as measured by MSCI, Turkey (+1.5%), Czech Republic (+1.4%), and Mexico (+1.2%) have outperformed this week, while Colombia (-3.4%), Brazil (-2.1%), and UAE (-2.1%) have underperformed.  To put this in better context, MSCI EM fell -1.4% this week while MSCI DM rose 0.3%.

In the EM local currency bond space, India (10-year yield -11 bp), Poland (-9 bp), and Indonesia (-3 bp) have outperformed this week, while Turkey (10-year yield +44 bp), Colombia (+18 bp), and Malaysia (+14 bp) have underperformed.  To put this in better context, the 10-year UST yield rose 18bp to 2.50%.

In the EM FX space, MXN (+1.6% vs. USD), PLN (+0.4% vs. EUR), and ARS (+0.2% vs. USD) have outperformed this week, while COP (-3.1% vs. USD), TRY (-3.0% vs. USD), and KRW (-2.2% vs. USD) have underperformed.

A Korean special prosecutor indicted Samsung chief Jay Y. Lee on bribery charges.  He is accused of exchanging bribes for government favors, which were uncovered during the investigation of President Park.  Lee allegedly directed tens of millions of dollars to a confidante of President Park in return for government support of a 2015 merger that benefited his interests.  These developments could fundamentally change the role of the chaebol in the Korean economy.

Korean press is reporting that China has told its travel agents to halt sales of holiday packages to South Korea.  If confirmed, the move would likely be in retaliation for Korea agreeing to deploy a US missile defense system.  Spokesman for China’s Foreign Ministry said he wasn’t aware of any such measures while an official at the Korea Tourism Organization (KTO) said China has issued the ban.  KTO estimates that nearly half of the foreign visitors to Korea last year were from China.