Articles List

Articles List

Closing Bullish Cedi View

We have decided to remove a bullish view on the Ghanaian cedi from our Asset Class Strategy table, with a loss of 3.65% on a total return basis. The view (initiated on August 5) was based on the expectation that news of forthcoming assistance from the IMF would boost investor confidence - similar to the move seen in the Zambian kwacha in June 2014 when the authorities there announced IMF support.

First Mover Expansion A Sign Of Things To Come

BMI View: Bulgaria is well positioned to increase its regional competitiveness as an autos production hub in Central and Eastern Europe. Recent investment from Litex Motors, highlights the growing opportunities for autos manufacturers, backed up by continued investment from key international suppliers of parts and accessories.

Fast Becoming The Eurozone's Biggest Challenge

France's growth outlook remains grim, with further stagnation remaining our core scenario. Over the long-term, the inability of France to restore economic growth could become one of the main challenges to the eurozone's survival. France's Manufacturing Purchasing Managers' Index (PMI) fell sharply below consensus in August, dropping to 46.5, against consensus expectations of 47.8, indicating an accelerating pace of contraction. Manufacturers indicated the steepest reduction in new orders for 16 months. While the Services PMI rose to 51.1 from 50.4 the previous month, service sector companies were the least optimistic for 15 months during August. Furthermore, job shedding across the private sector continued apace, supporting our forecast for unemployment to continue rising throughout 2014 and 2015, and falling no earlier than 2016. France's growth outlook remains grim, with further stagnation remaining our core scenario. Over the long-term, the inability of France to restore economic growth could become one of the main challenges to the eurozone's survival. France's Manufacturing Purchasing Managers' Index (PMI) fell sharply below consensus in August, dropping to 46.5, against consensus expectations of 47.8, indicating an accelerating pace of contraction. Manufacturers indicated the steepest reduction in new orders for 16 months. While the Services PMI rose to 51.1 from 50.4 the previous month, service sector companies were the least optimistic for 15 months during August. Furthermore, job shedding across the private sector continued apace, supporting our forecast for unemployment to continue rising throughout 2014 and 2015, and falling no earlier than 2016. France's growth outlook remains grim, with further stagnation remaining our core scenario. Over the long-term, the inability of France to restore economic growth could become one of the main challenges to the eurozone's survival. France's Manufacturing Purchasing Managers' Index (PMI) fell sharply below consensus in August, dropping to 46.5, against consensus expectations of 47.8, indicating an accelerating pace of contraction. Manufacturers indicated the steepest reduction in new orders for 16 months. While the Services PMI rose to 51.1 from 50.4 the previous month, service sector companies were the least optimistic for 15 months during August. Furthermore, job shedding across the private sector continued apace, supporting our forecast for unemployment to continue rising throughout 2014 and 2015, and falling no earlier than 2016.

Repeating European Carbon Market Mistakes

As China rolls out its pilot carbon markets the risks that it will repeat some of the same mistakes that have been made in Europe appear to be growing.

Gold: Assessing The Impact Of Fixed Income Strength

We remain neutral gold on a three-month basis and bearish over the longer-term. A gradual easing of geopolitical risks to the global economy combined with monetary policy normalisation in the US will drag prices lower in 2015. We forecast the first rate hike by the US Federal Reserve in H215.

Settlement With Holdouts Unlikely Before 2015

Argentina will likely find a way to resume coupon payments on its defaulted debt. However, the standoff between Argentina and holdout investors is likely to drag on until at least early 2015, when the government will face a reduced risk of cross-default claims from exchange bondholders. A prolonged period of uncertainty will reverse the positive strides the government made in H114 to bolster investor sentiment.

Neutral On Indian Equities, Looking For A Favourable Entry Point

We remain bullish towards Emerging Asian equities relative to Developed Asian equities due to a superior economic growth outlook, cheaper valuations, and a more favourable technical picture. Within EM Asia, our favourite pick has long been the Shanghai Composite. We argued earlier this year that Chinese equities were very cheap even relative to Emerging Markets globally (See 'China Yet To Participate In EM Rally', May 21) and called for Shanghai Composite outperformance amid an increasingly attractive technical picture.

Russia's Import Ban: Where Are The Opportunities?

On August 7, Russia introduced a one-year ban on imports of certain agricultural products from the US, EU, Canada, Australia and Norway. In this analysis, we highlight the countries, sectors and sub-sectors which stand to benefit the most from Russia's ban.

Clinical Trial Numbers Drop

Increasing numbers of clinical trials are being conducted in emerging markets, mainly due to lower costs. The attractiveness of these non-traditional destinations is also boosted by improving healthcare infrastructure, more and better trained medical professionals, and a growing requirement for local trials in the pharmaceutical approval process. We note that the majority of clinical trials will continue to take place in developed states.

Secessionist And Autonomist Movements To Gain Major Momentum

More countries will face separatist or autonomist pressures over the coming decade, and central versus federal tensions will remain a major source of political risk worldwide. However, significant obstacles to independence mean that few new sovereign states will emerge.

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