What Our Analysts Are Reading – 6/16/2017

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Each week Frontier Strategy Group’s global team shares their view on key media stories, and what the implications are for businesses that operate in emerging markets. For more information about how to contact our analysts, send us an email.


Alec LeeAlec Lee on “Tillerson signals tough Trump administration stance on Cuba”

“Any reversal of Obama era policies toward Cuba are unlikely to quicken a movement toward further economic liberalization locally. With little liberalization see under Raul Castro in the months following his brother’s death, the next key watermark will be the selection of new leadership locally, which is schedule for 2018. Until then, expect Cuba to continue to witness weak economic performance.”

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William Attwell on “Zambia opposition MPs suspended after missing president’s speech”

“The move by the parliamentary speaker to suspend the legislators is consistent with rising authoritarianism under President Edgar Lungu, whose administration is clamping down on critics in the political opposition, media and civil society. Expect increased investor unease in the coming months amid a likely uptick in protests.”

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Zeynep Kosereisoglu on “Federal Reserve raises interest rates, GCC countries react”

“Due to their pegged currencies, many GCC countries will see domestic interest rates increase, following the US Fed’s rate hike in June. GCC teams should factor in gradually rising borrowing costs through to 2018 and monitor US economic developments to anticipate the timing of future rate increases.”

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Dalia Naguib on “Algeria’s Bouteflika urges spending cuts, warns on foreign debt”

“Bouteflika and his newly appointed government will promote more protectionist measures to keep the economy afloat. Instead of turning to external financing, the government has suggested “unconventional internal funding”. While not defined by the government, this could refer to issuing local bonds and/or printing more money, which could cause inflationary pressures.”

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Antonio MartinezAntonio Martinez on “Fed’s Effort to Guide Markets Falls Short”

“The Federal Reserve continues to signal that it will raise its benchmark interest rate two more times this year, with a 25 basis point rate hike likely this month. But global financial conditions have been little affected, which may lead (in 2018 or beyond) to a faster tightening cycle over the medium term.”

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Matthew KindingerMatthew Kindinger on “CBN injects $413.5 million into forex market”

“The Central Bank of Nigeria is continuing to intervene in the foreign currency market, with this latest injection of dollars contributing to an improvement in access to foreign currency and a strengthening of the parallel naira rate. However, the central bank’s ability to repeat these interventions could be constrained if oil prices and domestic oil production do not increase in coming months.”

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Mark McNameeMark McNamee on “U.S. Senators Reach Bipartisan Deal On Bill To Increase Sanctions On Russia”

“Firms will see mild ruble depreciation ahead of the likely approval of additional sanctions against Russia. The sanctions are important in that they target the mining and transport sectors while also giving Congress the power to review and stop any effort by the president to ease sanctions. MNCs should plan on US sanctions remaining in place for the long-term.”

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JosefJosef Jelinek on “China’s New Bridges: Rising High, but Buried in Debt”

“The Chinese growth model continues to rely on infrastructure investments whose returns are insufficient to repay the interest and capital they were built on. China’s debt levels continue to rise and its debt efficiency continues to worsen as new debt is increasingly used to repay the interest on old debt. Companies will feel the pinch as the economy inevitably slows.”

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