Emerging Markets

  • The Emerging Markets will be tuned in to the Fed speakers.

    Emerging Markets could Feel the Effects of This Week's Fed Speakers

    Some dovish signals from the Fed and a bounce in oil prices helped EM end last week on a firm note.  This week, the US retail sales report could be important, and the same goes for CPI and PPI data too.  The Fed’s Dudley, Kaplan, Harker, Williams, Lacker, Lockhart, Powell, and Evans all speak this week.

    The Fed releases its Beige Book Wednesday for the upcoming FOMC meeting April 27.  Within specific EM countries, risks remain in place.  We continue to feel that markets are too optimistic regarding the impeachment process in Brazil.  

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  • Indonesia will likely stop its easing cycle and Vietnam does a cabinet shuffle.

    Indonesia and Vietnam Lead Emerging Markets News

    In the EM local currency bond space, the Philippines (10-year yield -9 bp), Mexico (-5 bp), and Ukraine (-4 bp) have outperformed this week, while Peru (10-year yield +21 bp), Brazil (+18 bp), and Russia (+11 bp) have underperformed.  To put this in better context, the 10-year UST yield fell -4 bp this week to 1.73%.

    In the EM FX space, ARS (+2.3% vs. USD), RUB (+0.8% vs. USD), and HUF (+0.3% vs. EUR) have outperformed this week, while BRL (-2.7% vs. USD), MXN (-2.2% vs. USD), and ZAR (-2.1% vs. USD) have underperformed.

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  • Mozambique's good fortune seems like an eternity ago.

    Pessimism is Taking Over Mozambique

    It is unsettling how quickly the shine can come off a development success story. Only a few years ago, Mozambique was standing at the helm of sustained and rapid economic growth. Optimism was nurtured by high commodity prices, robust foreign direct investment and warm relations with development financing agencies.

    Economic and social wobbles after the global financial crisis seemed to have been relegated to the past. Political minds were even discussing how to achieve annual growth rates in the double digits.

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  • South Sudan represents the danger of relying on one resource.

    South Sudan's Lack of Economic Diversification is an Expensive Lesson

    Developing off the back of one natural resource is risky for any country. It makes them reliant on external conditions beyond their control, such as global demand and supply. Since June 2014, global oil prices have fallen by more than 70%. Consumers are happy. Oil producing nations are not.

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  • South Africa is undergoing an anti-growth demographic transition.

    South African Demographics are Riding the Economic Growth Brakes

    South Africa has very high unemployment levels. Part of the reason for this is that there has been a disconnect between the growth in employment and the growth in the labour force, that is people who are working or looking for jobs.

    Although growth in employment has kept pace with growth in the working-age population, it has not kept pace with growth in the labour force. Unemployment has therefore increased both in absolute terms and as a proportion of the labour force.

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  • China plays the long game and it may not be what it seems.

    Beyond the Hype of China in Africa

    In December 2015, Chinese President Xi Jinping flew into South Africa for the Forum on China-Africa Co-operation with great fanfare. There were many announcements about prospective investments across Africa. Agriculture featured prominently. However, what is the real story of China in Africa on the ground, beyond the hype?

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  • Even a pre-Lula order won't be enough to rescue Brazil from itself.

    Brazil's Narrative Looks Worse than Originally Perceived

    While international media focuses on Brazil’s mass demonstrations against corruption, efforts behind the façade precipitate regime change, restoration of a pre-Lula order, and a struggle against the BRICS nations. The U.S. feels threatened by an era of multipolarity, which deeply implicates China, and other emerging economies.

    In August 2016, Rio de Janeiro should host South America’s first-ever Olympic games, which were supposed to be its great coming out carnival, even amid campaigns against the Zika virus.

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  • In pharmaceuticals and health care, Cuba dispels the 'third-world' myth.

    Where Cuba Punches Above its Weight

    As the first US president visits Cuba in 88 years, many Americans hope that Barack Obama’s trip will lead to a normalisation of relations with Cuba, opening the Caribbean nation up to the American values of liberty, free trade and democracy. Cuba undoubtedly has its problems, as numerous articles attest. However, my experience as a visitor and researcher there shows a different side to the story and there is much the capitalist world can learn from Cuba, too.

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  • The ANC has gone sideways and is now a huge Zuma-Gupta mess.

    South Africa's Zuma-Gupta Connection

    Even that family, if people feel it has to be brought to book, structures must do that, the officials must call them and talk to them and give them a marching order not through shouting outside because all of us in the NEC [African National Congress National Executive Committee] have our small skeletons and we don’t want to take all skeletons out because hell will break loose.

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  • Is Cuba even ready to join the global community?

    Paving the Way Forward, Ready or Not

    President Barack Obama became the first sitting U.S. president to visit Cuba in nearly 90 years as he set off on a three-day trip to the island nation on Sunday, the latest step in a thaw in relations that began in December 2014.

    Ahead of the trip, the administration issued its fifth set of measures relaxing regulations that restrict U.S. banking, financial, travel, business and economic dealings with Cuba.

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