Articles List

Monthly FX Strategy: EM FX Outperformance Maybe Coming To An End

We see growing risks to EM FX on the whole, and see potential for the USD, EUR, JPY, and GBP to outperform EM FX after a long period of underperformance. That said, there are still some bright spots within EM, such as the MXN, COP, MYR, and PHP.

Liquidity Conditions Manageable Despite Upcoming Rate Hikes

SAMA will hike interest rates by another 25 basis points in 2017, taking the reverse repo rate to 1.25% by the end of the year, as it follows moves by the US Federal Reserve in order to support confidence in the peg. Liquidity pressures will remain manageable, as SAMA takes proactive measures to support liquidity conditions in the country, primarily through debt issuance.

Cleaner Energy Drive To Boost Reliance On Natural Gas Power

Government efforts to implement a cleaner energy mix will mean Hong Kong's electricity sector will be increasingly reliant on natural gas-fired power generation, which will double in size by 2026 at the expense of coal-fired power.

Six Sectors To Watch In The Middle East And North Africa

Several sectors in the Middle East and North Africa region are set for particularly impressive growth, despite generally slower economic activity in the region over the next decade compared to the last. A survey of our industry research heads highlighted six hotspots including: UAE infrastructure and pharmaceuticals & healthcare, Iran luxury retail, Morocco autos and power & renewables, and Egypt natural gas.

Challenging Landscape Will Not Deter Pharmaceutical Investors

The underdeveloped nature of Sub-Saharan Africa’s pharmaceutical market will necessitate a tailored market access strategy for drugmakers. Ongoing economic difficulties and government focus on the containment of infectious diseases, in addition to regulatory, pricing and currency challenges, will create a difficult operating landscape. International firms will benefit greatly from identifying the bright spots in the region and avoiding those markets where the risks outweigh the opportunities.

Six Key Themes For Middle East And Africa Agribusiness

Africa will record sustained production deficits in corn and limited growth in palm oil and other agricultural products over the coming years, with the acute threat of a returning El Niño on the horizon. Similarly, countries in the MENA region will need to accommodate growing imports of agricultural commodities, requiring adequate infrastructure and supportive public finances. While GM seed usage in Africa has strong potential, the uptake will be inconsistent. Finally, low-cost fertiliser producers in the MENA region will be bright spots in an oversupplied global market.

CEE Central Banks In No Hurry To Tighten

We are no longer expecting interest rate hikes in 2017 in Poland, Hungary and Romania, where central banks have recently adopted a more dovish stance amid still-subdued core inflation. However, we still believe that the respective central banks may be too sanguine on inflation risks, particularly in Hungary.

Global O&G Spending To Rise 5.1% In 2017

Global capital expenditure on oil and gas will rise 5.1% to USD465bn in 2017 as more efficient upstream operations and more confidence behind a +USD50/bbl oil price, support spending.

Prioritising Asian Crude Sales Over US

Saudi Arabia is shifting its focus to the Asian light crude market looking to combat the increased competitiveness of WTI and Brent-linked cargos. At the same time it is increasing crude prices to the US, which will reduce imports of Saudi crude and help draw down inventories in Q217.

RBI Turns Its Attention To Excess Liquidity While Maintaining Neutral Stance

During its Monetary Policy Review between April 5 and April 6, the Reserve Bank of India (RBI) left the repo rate unchanged at 6.25% and hiked the reverse repo rate from 5.75% to 6.00%. We maintain our forecast for the MPC to remain on hold over the course of FY2017/18 (April - March) as it seeks to strike a balance between managing inflation expectations and supporting growth. At the same time, a narrower interest rate corridor will help to drain excess liquidity and enhance the overall transmission of monetary policy.

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