Articles List

Articles List

Greater Access To Emerging African Markets Will Boost Drugmaker Interest

The COMESA-EAC-SADC free trade area agreement will attract greater interest from multinational pharmaceutical companies looking to expand their operations in untapped African markets. However, significant challenges to the successful implementation of the agreement remain, and the commercial benefits will only become visible over the long term. There will be a boost to intra-Africa pharmaceutical trade but the overwhelming reliance on imports to meet the majority of the region's pharmaceutical needs will continue to prevail.

Chevron: Short-Cycle Focus To Buffer Profits

H216 will prove challenging for Chevron, as weak commodity prices and limited output growth weigh on revenues. However, strong forecast production growth and a strategic pivot towards short-cycle and brownfield projects support our bullish outlook on the company in the longer term.

Battle For Aleppo - A Turning Point For The Syrian War?

The battle for Aleppo between President Assad’s troops and rebel forces will have significant implications for the future of the Syrian conflict. The growing influence of Jihadist groups - which have joined forces with more moderate rebel factions - will make it increasingly difficult for the US-led coalition to effectively support the opposition. A military victory would further embolden Assad, reducing the chances of a negotiated settlement.

Total: Upstream To Outperform Downstream

Stringent cost-cutting and production increases will continue to help Total outperform its peers in the upstream sector; however the downstream will increasingly come under strain as crude throughput falls due to refinery upgrades and a global fuels glut.

Upsides To Small Joint Medicine Procurement Agreements For Drugmakers

An EU-wide medicine procurement initiative poses risks not only to multinational pharmaceutical firms' revenues, but also to the ability of many Central and Eastern European countries' ability to purchase high-value drugs. The trend of small joint-procurement agreements across the region, however, will allow drug prices to reflect the economic development of each small group. This presents opportunities for drugmakers to sell considerably higher volumes without sacrificing their profit margins.

Banks Teetering On The Brink Of A Potential Bailout

China's headline non-performing loan (NPL) ratio of approximately 1.8% reported by the CBRC is highly understated, and we estimate that the country's 'true' NPL ratio could rise as high as 20% after taking into account listed firms' finances. While the NPL ratio is already at an elevated level, credit risks are still mounting amid poor performance by overcapacity companies and a precarious housing market. Given that an NPL ratio of 20% would entail losses as much as CNY12.5trn (USD1.9trn), the likelihood of a government bailout of the banking sector is increasingly likely over the coming years.

EU To Stymie Efforts To Cap Immigration

Switzerland's government faces a period of uncertainty following the UK's vote to leave the EU in June. There are concerns in Bern that talks between the EU and the UK over Brexit could supersede ongoing Swiss negotiations over an immigration cap. We believe the Swiss will reach an agreement with the EU over the coming months, conceding some concessions on immigration quotas in an effort to maintain favourable bilateral deals.

OPEC Reasserting Its Market Role

Renewed attempts at verbal intervention by OPEC will help bolster oil market sentiment, although the group will struggle to rebuild its role as a backstop to Brent.

‘Brexit’ Presents Long-Term Risks

The UK's vote in June to leave the European Union will have limited near-term repercussions for Norway, but it could have a significant long-term impact. In many plausible scenarios, depending on how ‘Brexit’ evolves, Norway could end up renegotiating its arrangement with the rest of Europe, though both EU accession and exiting the European Economic Area are extremely unlikely outcomes.

Recession Ending, But Recovery Will Be Subdued

Russia's economy is emerging from prolonged recession in H216 but we forecast growth in 2017 and 2018 to be relatively subdued when considering the scale of the downturn since 2014. Rising oil prices are acting as a short-term boost, but will reduce the urgency to implement badly needed structural reforms, thus maintaining the country's commodity dependence.