Milltrust Alert – Selected Insights from the Emerging Markets

July 5, 2018

BY Alexander Kalis

Milltrust in the News

Milltrust’s Hopkins: EM on the up despite external economic headwinds

By Hedge Fund Intelligence

Simon Hopkins, Milltrust International CEO, tells AsiaHedge that emerging markets are still attractive in the face of investor concerns about a stronger US dollar, the prospect of higher US rates and rising inflation…

In This Week’s Issue…

Tariff D-day

Shares in Asia dropped to a nine-month low as the trade war moves to a new stage on Friday with the prospective imposition of tariffs between the world’s two biggest economies. Levies on $34 billion of China’s exports will not only hurt the Asian nation, but the U.S. itself and the rest of the world, Gao Feng, China’s Commerce Ministry spokesman, said at a press conference. Beijing’s retaliatory tariffs will become effective “immediately” after the U.S. acts, according to the customs authority.

The Environmental Challenges of the Belt and Road Initiative

Described as the “project of the century” by Chinese President Xi Jinping, the Belt and Road initiative, which seeks to strengthen trade and investment partnerships across Asian, European and African markets, could affect over 4.4 billion people in some 70 countries and generate a GDP of over USD 21 trillion once completed. While many governments and businesses have unsurprisingly welcomed the implementation of the BRI for the lucrative opportunities that are likely to be provided and have already planned to act in order to extract the greatest benefits for the interests of their political elites and capital, the high cost to the environment is an issue that has so far been carefully set aside, attracting very little scrutiny from the mass media as well as the academic community. The World Wildlife Fund (WWF) carried out a rapid spatial analysis of the impacts.

MSP Hike in India

India has raised the price at which the government will buy new-season common rice variety from domestic farmers by 13 percent as the state looks to woo farmers ahead of general elections due next year. India, one of the world’s key producers of an array of farm commodities, announces support prices for more than 20 crops each year to set a benchmark. Analysts and economists have warned the move could help push up inflation, add to the fiscal deficit and prompt the Reserve Bank of India to raise interest rates more steeply than expected.

Mexican win

Mexico’s peso led another plunge in emerging-market currencies as the leftist Andres Manuel Lopez Obrador cruised to victory in Mexico’s presidential election. In a victory speech following the vote, Lopez Obrador made a point of allaying market concerns by promising to respect the central bank’s autonomy, avoid raising taxes in real terms, and stay within “legal channels” as he reviews oil deals.

Geopolitical risks cloud recovery in MENA

In line with market sentiment, economies across the MENA region are witnessing a gradual recovery from last year’s downturn. Oil-exporting economies are benefiting from the rise in oil prices, allowing some governments to boost spending and taking some pressure off financial markets. While higher oil prices are bad news for oil-importing economies, robust global economic dynamics are supporting export growth, partially offsetting the deterioration of the current account. However, in spite of these encouraging developments, the ongoing geopolitical pressures continue to disrupt the recovery momentum.

Categories: News