(from my colleagues Dr. Win Thin and Ilan Solot)

Positive momentum for EM assets looks to extend its moves from last week.  EM sentiment is being buoyed by gains in developed markets equity indices, the weaker dollar more broadly, and gains in the commodity space.  Regarding the latter, we note that the moves in the MSCI EM index, for example, have closely mirrored the moves in CRB commodity index, even though the benefits to EM countries from moves in commodity prices are far from uniform.

Looking ahead, China trade numbers and Turkish current account data will be watched closely. On the political side, Brazil will remain a focus as markets still try to assess whether the latest cabinet reshuffle by the government will bear fruits.  In Turkey, we doubt that the terror attack in Ankara will have a material impact in the upcoming elections on November 1, but it increases the risk of social discontent.  Elections in Poland, Argentina, and India (regional) are coming up, but we will discuss these more in depth in separate upcoming reports.

China reports September trade Tuesday, with exports seen at -6% y/y and imports at -16% y/y. CPI and PPI will be reported Wednesday, with the former seen rising 1.8% y/y and the latter seen falling -5.9% y/y.  New loan and money supply data should come out this week.  New loans are expected at CNY900 bln, while M2 is seen rising 13.1% y/y. Data is likely to be soft, but unlikely to put much of a dent into the recent global equity market optimism.

Singapore reports advance Q3 GDP Wednesday, and growth is expected at 1.3% y/y vs. 1.8% in Q2. The MAS typically meets that same day.  Given weakness in the economy and rising deflation risks, we think the MAS will loosen policy with an adjustment to its S$NEER trading band.  August retail sales will be reported Thursday, and are expected to rise 1.6% y/y vs. 5.2% in July. Lastly, September trade will be reported Friday, and NODX is expected at -3.1% y/y vs. -8.4% in August.