Emerging Markets

Baht’s brawn weakens sick man of Southeast Asia

19 Aug 2019

Thailand’s $500 bln economy expanded at its slowest rate in nearly five years last quarter, hit by cooling exports and tourism. Yet its currency is an outperformer, aggravating both problems. Lower rates and public spending could weaken it, as might investing more funds abroad.

Argentina’s Macri may yet survive his own policies

9 Apr 2019

The president’s support is sinking as the peso dives, inflation persists and poverty rises. Populist nemesis Cristina Fernandez wants to run in October elections, spooking investors. But Macri’s IMF-endorsed policies, even if softened, are likely to endure. He may yet do so too.

Honeymoon ends early for Brazil’s Bolsonaro

22 Mar 2019

The far-right president is finding governing harder than firing off incendiary tweets. A Washington meetup with fellow populist Donald Trump was low on substance, key pension reform is struggling and his popularity has plummeted. Even his predecessor’s graft arrest may not help.

Brazil’s Bolsonaro hits pension bull’s-eye

20 Feb 2019

The new president’s plan to trim $270 bln from ruinous social-security spending is smartly aimed. Shoot much higher and supporters and lawmakers might balk entirely; much lower and foreign investors might not take him seriously. Now the congressional haggling begins.

India’s big budget betrays Modi’s election angst

1 Feb 2019

A decision to ease efforts to reduce the fiscal deficit will dent the government’s prudent reputation. Yet support for farmers, a new pension scheme and a higher effective tax exemption, even as revenues fall short, will give the prime minister a better shot at a second term.

Brazil’s new president starts with the easy part

3 Jan 2019

Ex-army captain Jair Bolsonaro has fired a salvo of temporary decrees, favoring farmers over indigenous people and crimping NGOs. He may do the same to ease gun controls and start vital pension reform. But conquering Congress, which is needed for lasting change, will prove harder.

Apple sales warning is a Chinese joint venture

2 Jan 2019

Investors may not always believe China’s official data, but Apple’s warning that iPhone sales rapidly decelerated in the country sends an alarming message about the main engine of global growth. Still, in some ways the U.S. tech giant may be at the sharp end of the slowdown.

Ghosts of Argentine past will come for Macri’s job

26 Dec 2018

The pro-business president has had to seek IMF help as he tries to steer Latin America’s No. 3 economy to health. That’s a gift to his discredited Peronist opponents. Recovery from drought and currency collapse may come too late to prevent the return of the spendthrifts of yore.

East Africa will buck global great rift trend

20 Dec 2018

Twenty-five years after genocide, Rwanda’s economy is motoring sufficiently to need new markets. The potential inclusion of Ethiopia would make East Africa a single market of 250 million people. If it prospers, it would provide a useful counterpoint to global balkanisation.

Mexico’s revolutionaries risk spoiling the party

12 Nov 2018

President-elect López Obrador doesn’t take office until next month, but he and his fellow leftists have already upset markets with moves to nix an airport project and rein in bank fees. Such fumbles could help guide Brazil’s far-right populist Jair Bolsonaro as he nears power too.

China’s oil appetite won’t be enough to save Iran

8 Oct 2018

Beijing has resisted U.S. calls to cut crude imports once sanctions hit. But hopes that will be enough to offset a drop of as much as 1.6 mln barrels a day in Iranian exports look optimistic. Instead, it seems to be eyeing the old playbook of public bluster and quiet reductions.

Ashmore flashes buy signal on emerging markets

7 Sep 2018

The fund manager that focuses on these riskier geographies is growing revenue. Also, its managers are taking more risks as a rout caused by rising trade tensions and turmoil in Turkey throws up opportunities. That suggests developing markets can avoid a synchronised slump.

Shanghai’s early market win threatens oil duopoly

4 Sep 2018

In four months, China's new crude futures contract built up an impressive 7 pct share of global turnover. Currency risk is a worry, and foreign traders remain on the sidelines. Even so, with Iran’s help, Beijing is on the way to building a credible benchmark.

Consumer giants have bigger problems than Turkey

28 Aug 2018

Unilever and Nestlé can resist a crisis in Turkey, which accounts for little of their revenue. But both will suffer if troubles spread across emerging markets, which account for about half of group sales. All the more so since Western shoppers are unlikely to take up the slack.

Capital retreat turns light on Turkey lookalikes

17 Aug 2018

Other emerging economies also have lots of foreign currency debt or inadequate FX reserves. Some, such as South Africa and Argentina, are already hurting. Breakingviews ranks the countries that look the most vulnerable as flows to riskier markets go into reverse.

Carlsberg’s drinking game victory looks temporary

16 Aug 2018

The Danish brewer’s second-quarter sales grew a better-than-expected 7.6 pct. The World Cup turned its big Russian business from a drag into a boon. While Carlsberg now trades at a premium to Heineken and AB InBev, less exposure to emerging markets means the bump is temporary.

Indonesian fight to help rupiah carries risks

15 Aug 2018

The central bank has raised rates to limit the damage to its currency from a Turkey-triggered drop in emerging markets. Meanwhile, the government is slapping tariffs on some imports. Monetary fixes are rarely enough but Jakarta’s solutions may jeopardise welcome economic reforms.

Sovereign investors sound market alarm

13 Jul 2018

Singapore's GIC has joined compatriot Temasek in striking a note of caution. It is reducing its exposure to developed markets and holding more cash: trade ructions, tighter rates and stretched valuations are giving it pause. That all points to lower returns ahead.

Turkey’s strongman gains mandate for bad policies

25 Jun 2018

Tayyip Erdogan and his AK Party emerged victorious from presidential and parliamentary elections. Enhanced powers may encourage the Turkish leader to implement inflationary stimulus and again challenge the central bank’s independence. Investors will be less forgiving than voters.

Saudi index win is stepping stone not step change

21 Jun 2018

Adding the kingdom to MSCI’s emerging markets index helps Riyadh internationalise its capital market by potentially sucking an extra $44 bln into domestic stocks. Yet the catalyst for a real transformation – a domestic listing of oil giant Aramco – remains up in the air.