Articles List

Articles List

Colombian Border Closing Will Hardly Temper Criminal Activity

A recent attack against Venezuelan soldiers near the Venezuela-Colombia border reinforces our view that criminal gangs remain well entrenched in the region, posing a persistent threat to security. However, we see Venezuela's decision to close the border as not only a politicised response by President Nicolás Maduro, but also likely to stymie more substantive efforts to improve the security environment in the border region.

Brent Crude: Testing a USD35/bbl Scenario

Caught up in a broader market sell-off, Brent crude has heavily overshot to the downside, trading as low as USD42/bbl. While we believe the medium-term price outlook is positive from these levels with the fundamentals remaining weak, a renewed shock to the global financial markets and aggressive risk-off trading could push Brent towards USD35/bbl support.

Low Oil Prices and Unorthodox Policy Will Weigh on Venezuela's External Accounts

Given the centrality of the oil sector to Venezuelan exports and the collapse of the price of crude, the country's external accounts will be under immense pressure over the coming quarters. Although the government's efforts to limit access to hard currency and the rapid depreciation of the bolívar on the parallel exchange will significantly reduce imports, the current account balance will fall into negative territory for the first time in nearly two decades.

Three Autos Markets to Replace the BRICs

As the autos markets of Brazil, Russia, India and China (BRICs) undergo a period of deceleration, and in some cases contraction, we look at possible replacements as opportunities for growth, based on our forecasts for total vehicle sales.

More Easing to Come as PBoC Scrambles to Support China's Growth

The PBoC cut its benchmark interest rate and broad reserve requirement ratio (RRR) on August 25th, and we believe that the central bank will ease further over the remainder of the year in order to support domestic liquidity and the real economy. As such, we have revised our end-2015 benchmark interest rate forecast down to 4.10%, implying two more interest rate cuts of 25bps each.

Rise Of Islamic Radicalism Could Pose Threat To Political Stability

Despite the conclusion of the political crisis in Bangladesh in May, we remain cautiously optimistic about the political risk outlook in Bangladesh as the country has historically been susceptible to economic disruptions resulting from political conflict. Moreover, the rise of radical Islamism also poses a considerable threat to Bangladesh's political stability.

China Paving The Way For Nuclear Expansion

Progress in the development of Pakistan's Karachi Nuclear Power Plant highlights the strengthening of China-Pakistan relations and aligns with our view that Chinese funding will play a critical role in new nuclear capacity development in Asia.

Regional Equity Sell-Off Has Further To Go

Amid the global equity market rout, three of our key views on regional equities have been playing out. Most notably, the Chinese stock market has re-entered a period of aggressive selling, with the Shanghai composite having now erased all of its 2015 gains. In May, we flagged up the increasingly tenuous nature of the Chinese stock market bubble (see 'Mainland Stock Bubble Increasingly Precarious', May 14), and in June we entered an outright bearish position on the Shenzhen Composite, and the index has since fallen by 42.3%.

Downside Pressure on Latin American FX Intensifying

Rising global headwinds will keep Latin American assets under pressure in the coming weeks. A sharp slide in the Shanghai Composite index since August 21, following the largest devaluation of the Chinese yuan since the 1990s on August 11, is driving significant risk-off sentiment towards emerging market assets and commodities.

North-South Korea Crisis Averted but Tensions Persist

North-South Korea tensions will persist, despite an August 25 deal to avert a military crisis. Pyongyang is likely to celebrate the 70th anniversary of its ruling party in October with a long-range missile or even nuclear test, thus leading to renewed strains.