Articles List

Articles List

Beyond Commodities: Strong Investment Will Sustain Current Account Deficits

In this first instalment of a region-wide look at Sub-Saharan Africa's balance of payments, BMI's Africa Country Risk team looks beyond the commodity story. While the collapse in commodity prices has played a large role in the continent's growing current account deficits, we shine a light on the infrastructure pipelines driving import demand across the region and the impact they will have on muting any immediate recovery.

Brent On Brink Of Sustainable Recovery

We have upgraded our oil price forecast this month with markets having priced in rebalancing earlier than we previously anticipated. We now forecast Brent and WTI to average USD46.5/bbl and USD46.0/bbl, respectively, in 2016. Our fundamental view for a gradual supply-side correction to emerge in H216 remains unchanged. We maintain that strong pullbacks in US shale output, alongside other non-OPEC production curtailments and a seasonal upturn in demand will offer support for prices, encouraging a stronger trading range over the next three-to-six months.

Spending Cuts Bring New Shale Strategy

Weakness in crude prices will spur greater resourcefulness on the part of shale oil producers, with companies targeting uncompleted well inventories, identifying refrac opportunities and bringing in new partners. New drilling will be limited in 2016, supporting our downbeat production trend for the year.

Huge Swing To Moderates Ahead Of Presidential Elections

The results of the runoffs in Iran's parliamentary elections show an even larger swing in favour of the moderate and reformist camp within Iranian politics than the first round of voting, offering a major boost to President Rouhani following the nuclear deal and ahead of presidential elections in June 2017, which we expect him to win.

Canar A Capacity-Enriching Play For Zain

Zain's acquisition of Canar is more opportunistic than strategic in nature, as it is unlikely that significant demand for converged services will emerge in the long term. Nevertheless, the eventual easing of stiff local economic headwinds would allow Zain to exploit next-generation service opportunities in the enterprise sector and proprietary wireline infrastructure would be a key part of its toolkit.

KWP Party Congress To Bring Major Changes

The North Korean Workers' Party's forthcoming congress will bring major administrative, personnel and economic changes to the country. However, there will be no significant reduction in Pyongyang's hard-line military and nuclear stances.

Industry Megatrends: Which Companies Stand To Win And Lose?

We have identified industry megatrends out to 2050 that will create opportunities and challenges for companies operating in these sectors. Below, we identify which companies will be winners and losers of these trends.

Large Deficits To Shrink Only Gradually

Egypt's persistently high fiscal deficit will decline only slowly over the coming years and there are signs of policy slippage which is worrying for the country's outlook. Indeed, rising political risks are likely to deter further subsidy cuts. We forecast the fiscal deficit to fall from 9.8% of GDP in FY2016 to 7.0% in FY2018 ensuring continued pressure on diminishing reserves.

Opportunities In Premium Food Cushion Domestic Slump

A brighter consumer outlook in Australia will support South Africa-based food retailer Woolworths' decision to expand into the more developed market as it seeks to penetrate the premium food retail business. Weakening economic conditions in South Africa will leave the company's targeted consumer base more cash-strapped, which will weigh heavily on domestic sales; expanding its presence internationally should mitigate some of this impact.

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