reports
- Hasnain Malik
- Stuart Culverhouse
Argentina: Shock victory for Milei in primaries will add to election u...
Provisional results from Argentina’s primary elections (PASO) held yesterday show a shock victory for Javier Milei, the radical far-right outsider and anti-establishment candidate of the Libertarian party (LLA), with 30.4% of the vote. In another case of opinion polls getting it wrong, with most recent polls putting him in third place, his share was some 10ppts higher than he was generally expected to get, and reversed the decline in his ratings that had been observed in recent months. But de...
- Hasnain Malik
Indonesia 2024 election more about competing personalities than polici...
Indonesia is the world's third largest democracy and its general election, for the presidency and parliament, is scheduled for 14 February 2024. Incumbent President Joko Widodo has reached his two-term limit. A second-round run-off between Prabowo Subianto and Ganjar Pranowo is likely. However, there is unlikely to be any major shift in economic policy, a mix of pro market-friendly and populism, foreign policy, with the balance between US security and Chinese economic relations common to most...
- Hasnain Malik
Barbie's billion and LGBT questions for ESG in emerging markets
Warner Bros' box office receipts topped a billion dollars in the third week after its release and its director Greta Gerwig is the first solo female director on a movie to hit this mark, surpassing Patty Jenkins' 2017 Wonder Woman's final total of US$822mn. The plot of the movie sees the toy doll crossover from the fantasy world to the real world. As a feminist tale some see it as inspiring to women, others see it as depressing for women, and a few see it as spiteful to men. In some countries...
- Hasnain Malik
- Stuart Culverhouse
Argentina: Investment implications of Sunday's primary elections
Ahead of Sunday’s vote, we asses the impact of the primaries (PASO) on Argentina's bonds and equities. The primaries will serve as a national opinion poll ahead of the presidential election on 22 October. Polls now suggest a tighter race with less of a clear-cut lead for the opposition compared to several months ago. FIXED INCOME The immediate impact on the bonds of the primaries will no doubt depend on what it signals for the chances of more orthodox and market-friendly policies under the ne...
- Hasnain Malik
US limits on investment in China Tech not as severe as feared
The Biden administration in the US continues to expand the curbs on China's advanced technology sector under the pretext of national security. The executive order on 9 August limits US investment in the Chinese tech sector. This is another episode in ever broadening friction between the US and China, which started under the Trump administration and remains one of the only areas on which there is bipartisan consensus in the US Congress. However, the latest curbs on investment are much less sev...
- Hasnain Malik
- Stuart Culverhouse
Argentina's primaries: Three things to watch this Sunday
Argentina holds its primary elections (PASO) this Sunday (13 August) which will serve as a national opinion poll ahead of the presidential election on 22 October. Crucially, ahead of an election that a year ago the opposition seemed almost certain to win, polls now suggest a tighter race amid infighting within the main opposition coalition (JxC) while the ruling coalition (UP) will hope its decision to unite behind a single candidate (Sergio Massa) along with the recent IMF agreement have tur...
- Hasnain Malik
Food and fuel prices moving up amid warning signs of another spike
Food prices, according to the latest UN FAO index published on 4 August, were up 1% month-on-month in July, although down 12% year-on-year, and 22% below the Russia-Ukraine War outbreak peak. Crude oil prices were up 14% mom in the same period, down 22% yoy, and 33% below the Russia-Ukraine War peak. Saudi and Russia committed to extend additional output cuts around the OPEC Joint Ministerial Monitoring Committee meeting of 4 August. The warning signs for another potential spike in food and f...
- Hasnain Malik
Niger coup could spark a regional war with global backers
ECOWAS has threatened military intervention in Niger if the 26 July military coup, led by General Abdourahamane Tchiani, is not reversed, restoring the elected government of Mohamed Bazoum, by 6 August. The juntas in Burkina Faso and Mali have declared that such intervention will be considered an act of war. ECOWAS has already applied sanctions on Niger and Nigeria has cut its electricity exports. There are precedents for military intervention and deployment by ECOWAS in West Africa: The Gamb...
- Hasnain Malik
India's communal violence restricted to small states (so far)
Discussion of the issue of tension, discrimination, persecution, or violence between members of different races, religions, sects, or social segments is highly emotive in any country. The country in question could be India, Iraq, Kosovo, Nigeria, Sri Lanka, Turkey, or, the US. No matter how much effort is made to conduct that discussion in dispassionate manner, there is something of a visceral instinct lurking in every participant. However, this issue has to enter the investment debate when i...
- Hasnain Malik
Rate cuts in EM: Who else cuts after Chile and with what risk?
Something of a consensus sound bite on emerging markets (EM) is that they were quicker to pull the trigger on policy rate hikes after Covid and now will be quicker to cut to stimulate growth, compared to developed markets (DM). And commodity price inflation was more of a problem for EM, whereas core inflation, usually the focus on policy rate decisions, is more of a problem for DM. Chile cut policy rate by 100bps to 10.25% on 28 July and, while not the first to cut, it focuses attention for t...
- Hasnain Malik
Taiwan: Incumbent party pro-independence candidate is favourite for el...
Taiwan's elections are scheduled for 13 January 2024. The outcome obviously will colour relations with mainland China and between China and the US but it will not decisively change them. The candidate from the incumbent, pro-independence DPP, Lai Ching-te is the favourite: he leads the opinion polls against three candidates who are splitting the opposition vote, and he needs merely a simply a majority to win the election. CHINA-TAIWAN-US STATUS QUO Hot military conflict around Taiwan is unlik...
- Hasnain Malik
China up but so are Oil, Rice, Wheat: Emerging-Frontier Equity Monthly...
As of the open on 31st July, MSCI EM and FM are both up 6% month-to-date, better than DM (up 3%). * US dollar is down 1%, with expectations of peaking policy rates following another 25bps rate increase, the 11th in the last 12 months, to 5.25% to 5.50%, and the slowest yoy core inflation, 4.41%, since September 2021. * Commodity prices for poorer small EM and FM importers increased substantially: Crude Oil (Brent) up 13% after Saudi's unilateral additional output cut, Rice (Thailand Whi...
- Hasnain Malik
Niger's coup and uranium amid the ongoing scramble for Africa
Niger's coup now appears complete after the army chief publicly endorsed it on 27 July. Similar to neighbouring Burkino Faso and Mali, the stated pretext for the forcible change in government was deterioration in security. This may have played a part but Niger's poorly performing democracy and the risk of loss of influence faced by its largest ethnic groups under an ethnic minority president, likely played much bigger roles. Given the long-term presence of US and French troops, the interests ...
- Hasnain Malik
- Patrick Curran
Nigeria: Tinubu's to do list – more oil and tax, less political violen...
President Tinubu's reforms enacted at the start of his term were much more wide-ranging and rapid than expected – fuel subsidy removal, central bank governor removal, FX rate devaluation and multi-rate harmonisation, and completion of legal reforms for electricity sector de-regulation. Attention now turns to what remains on the "to do" list: raising crude oil output, increasing tax revenue, and addressing political violence should be top priorities. Any evidence of progress on these could dri...
- Hasnain Malik
Egypt: Reforms slow-paced as Army keeps hold of the reins
From an equities perspective, we put in Egypt into a bucket of small emerging and frontier markets that are undergoing policy coursecorrection, albeit to varying degrees. The pace and depth of reform in Egypt (we discuss this in detail here) has disappointed this year, in terms of failure to move to full exchange rate flexibility or complete major privatisations. However, supply-side, or ease of doing business, reforms have been more forthcoming, in terms of cutting bureaucratic hurdles for p...
- Hasnain Malik
- Patrick Curran
Nigeria: Downgrade eurobonds to Hold as FX and MPC signal growing pain...
Yesterday the Central Bank of Nigeria (CBN) hiked its policy rate by 25bps to 18.75%, below the median projection of 19% among the 17 analysts surveyed by Bloomberg (with estimates ranging from 18.5% to 20.5%). The decision was split, with six MPC members voting to hike rates (four by 25bps and two by 50bps) and five members voting for a hold. The MPC also tightened the corridor around the policy rate from +100bps / -700bps to +100bps / -300bps, corresponding to some additional tightening (al...
- Hasnain Malik
EM still growing over twice as fast as DM in latest IMF forecasts
The IMF published marginally more positive global economic growth forecasts on 25 July, compared to its previous forecasts from April. In 2023, global growth of 3.0% is now expected, up 20bps from the prior 2.8%. Emerging markets are still growing in 2023 and 2024 combined at over twice the pace of Developed markets: 4.1% versus 1.5%. But the gap is 10bps narrower than in the April forecasts. IMF forecasts: EM growing at over double the pace of DM [/article-assets/body...
- Hasnain Malik
Wildfires less of a wildcard in climate change era for ESG in EM
Longer, drier, hotter, extreme weather, that is out of the range of historic average, is attributable to climate change and this increases the probability of wildfires in forested areas globally. * In January, wildfires in Chile scorched 430,000 hectares and led to 24 deaths. * In May and June, wildfires in Canada burned through 11.5mn hectares, which led to the evacuation of about 150,000 people, caused severe air pollution in the northeast of the US, affecting 75mn people, and smoke ...
- Hasnain Malik
Food: India rice export ban another red flag for commodity prices
With El Nino-related dry weather a potential threat to rice crops, the government's rice inventory down 23% yoy as of June 2023, 12% retail rice inflation and a general election in April 2024, India banned exports of non-basmati white rice, or c25% of its total rice export volumes, on 20 July. After doubling in the prior three years, India’s total rice exports accounted for 35% of the global total in 2021, according to OEC data; ie this ban immediately affects c9% of global rice exports. Ther...
- Hasnain Malik
Is Iran the next frontier market?
Iran's economy is permanently damaged by the US, EU and UN sanctions regime which has prevented its trade, investment, and financial integration with most of the world, apart from China, Turkey, and the UAE. Yet its physical and human capital resource base, autocratically managed by the Iranian Revolutionary Guard Corps elite, has somehow sustained the autarky. That suggests that despite the trauma of sanctions, there are the robust underpinnings of a potentially vibrant economy, should there...
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