What Our Analysts Are Reading – 1/12/2018

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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.

Joel Whitaker on “North Korea Moves Toward Détente With Seoul”

“North Korea in the Olympics is no surprise; it has sent athletes to 4 similar events in the South. It nearly eliminates Q1 conflict potential but not future risk. NK blocked as 2002 World Cup co-host: gunboat battle at Yeonpyeong. NK blocked as 1988 Seoul Olympics co-host: bombing of Korean Air flight 858. Our Korea Conflict scenario remains at 25%, so use a quiet Q1 to update contingency plans.”

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Ryan Connelly on “Wal-Mart to Raise Minimum U.S. Wage to $11 an Hour”

“Walmart, the largest US employer, has announced an increase to employee compensation. Whether this is due to cyclical wage pressures or the tax plan is irrelevant at this point: in either case, this bolsters potential consumption in the lowest income households. Similar moves have been announced by several other large employers. Another positive for the 2018 US outlook.”

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Danyi Yang

Danyi Yang on “Environmental tax to help China fight pollution”

“China will begin to levy environmental taxes on businesses and public institutions starting April 2018, as an upgrade of the existing pollutant discharge fees. While this adds to China’s ongoing efforts to transition to a “high-quality economic development” model, it will take a longer grace period before MNCs can experience globally consistent industry standards in the country.”

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Dalia Naguib on “Tunisian opposition leader calls for continued protests”

“Since the implementation of several price hikes on January 1, Tunisians have taken to the streets demanding the cancellation of these provisions, with protests becoming more widespread. MNCs are likely to face a few implications: 1) B2C sales are likely to decelerate in the short-term and 2) the 2018 budget may be revised to accommodate more subsidy spending, taking away from procurement spending.”

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Alex Schober on “Indec: Argentina’s inflation for December was 3.1% and finished at 24.8% for 2017”

“Strong inflation data was expected for December after subsidies were lifted for water, gas, electricity, and medicine. The final inflation number of 2017, 24.8%, was significantly higher than the central bank’s goal of 17%. This spike of inflation should be a one-off event; water, electricity and gas was by far the biggest reason for the spike in inflation (17.8% price increase).”

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athanasia-kokkinogeniAthanasia Kokkinogeni on “Italy’s Five Star Movement drops its threat to ditch the euro as election looms”

“MNCs will see further improvements in Western Europe, if the Italian populist front abandons its eurosceptic mandate. Italy’s Five Star Movement and Berlusconi’s Forza Italia seem to have changed their mind about a euro referendum in 2018 upon their potential election in March. Thus FSG raises the likelihood for an upside for the region and revises towards appreciation the euro for 2018.”

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