What Our Analysts Are Reading – 12/22/2017

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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.

William Attwell on “New South Africa Party Chief Faces Economic Challenge”

“Cyril Ramaphosa’s victory in the ruling party’s leadership contest will inject fresh confidence into South Africa’s beleaguered economy, strengthening both the rand and investor sentiment. Reforms needed to boost growth will be harder to achieve, however, and consequently MNCs should not expect any major rebound in performance in 2018.”

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Ryan Connelly on “Sweeping Tax Bill Heads to Trump for His Signature”

“The cornerstone of the tax plan are changes to how MNCs are taxed. The reduction in the corporate tax rate to 21%, alongside a tax on US-based revenues that are attributed to overseas holding companies, are designed to book more corporate profits in the US. The bill also includes measures that encourage firms to repatriate dollars and increase domestic investment.”

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Josef Jelinek on “Cutting Taxes and Raising Rates”

“Chinese authorities are concerned that the recent US tax overhaul along with expectations for a further three more rate rises by the Fed in 2018 will suck liquidity out of China and put renewed downward pressure on the RMB. The People’s Bank of China is allegedly preparing an array of tools to slow capital flight, including higher interest rates, capital controls, and currency intervention.”

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Dalia Naguib on “Egypt passed the Universal Healthcare Act”

“MNCs in all industries should prepare for the rollout of the universal healthcare act by assessing the impact on their costs. For example, the bill sets a 4% premium for employers on each employee’s monthly salary, and all companies must also pay a 0.0025% on profits to help fund the system.”

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Alex Schober on “INDEC: Argentina’s economy grew 4.2% in Q3 and 2.5% YTD”

“Argentina’s third-quarter real GDP growth of 4.2% YOY means that an end-of-the-year reading of around 3% has become very likely. The quarterly data was approximately in-line with market expectations. Private consumption led third-quarter growth from the demand side, increasing 4.2% YOY.”

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Martin Belchev on “Catalan pro-independence parties keep their majority in snap poll”

“The three separatist parties won a total of 70 seats, giving them enough seats to reassemble the parliamentarian majority of 2015. However, given internal divisions between them, it is likely that the formation of a new government will take weeks and the outcome of the crisis is likely to be achieved through renewed negotiations, rather than an outright declaration of independence.”

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