What Our Analysts Are Reading – 1/19/2018

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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.

William Attwell on “Zimbabwe finance minister says “bond notes” to stay for now”

“The finance minister’s confirmation that the use of “bond notes” – a quasi-currency ostensibly with equal value to the US dollar – will continue indicates that a resolution to Zimbabwe’s liquidity crisis is a long way off. The notes are backed by bank guarantees and were introduced to offset severe shortages of US dollars, in which over 90% of transactions take place.”

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Ryan Connelly on “Apple to Pay $38 Billion in Taxes on Cash Overseas, Build New U.S. Campus”

“The US Tax Plan changes the incentives that MNCs face when managing overseas earnings and choosing where to locate production facilities for goods and services sold to US customers. Though it is hard to tell how much of Apple’s announced plans are really a change from previous announcements, it is a signal that the Tax Plan may already be changing MNC behavior to favor more US investment.”

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Danyi Yang

Danyi Yang on “China births fall despite relaxation of one-child policy”

“The annual number of births in China has fallen for the first time since Beijing relaxed its one-child policy in 2016. An aging population and gradually shrinking workforce will further burden the country’s insufficient social security coverage, and raise business costs for multinational companies that are seeking to expand locally.”

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Mark McNameeMark McNamee on “Russians before the New Year did not please the sellers”

“The behavior of Russian consumers in December was typical for the entire year of 2017, marked by more rational purchases, less impulse buying, more attention to discounts, and a willingness to spend on goods seen as worth their value. In particular, car purchases and tourism rose notably over the year. MNCs need to factor this mindset into 2018 plans as demand will not accelerate.”

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Antonio MartinezAntonio Martinez on “With Fireworks, Washington Returns to the Core Trump Agenda”

“As the Trump administration’s agenda moves from de-regulation, healthcare and tax cuts to immigration, trade, and infrastructure, multinational executives will need to pay even closer attention to changes in U.S. policy over the coming months. The potential for upside and downside disruptors will remain high ahead of midterm elections in the United States this November.”

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athanasia-kokkinogeniAthanasia Kokkinogeni on “France would ‘look with kindess’ on UK Brexit change of mind: Macron adviser”

“MNCs should continue to execute on their Brexit contingency plans ahead of March 2019, when the UK officially exits the EU. Despite a recent change in the stance of the EU for the UK to reconsider its exit, cancelation of Brexit remains a low likelihood event, and MNCs are advised to proactively plan for the Brexit impact on their costs, supply chains and demand for their products.”

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JosefJosef Jelinek on “China’s Economic Growth Looks Strong. Maybe Too Strong.”

“China has reported growth of 6.9% last year, up slightly from 6.7% in 2016 and breaking a trend of gradual slowing that began in 2011. However, official figures have become implausibly smooth and steady. Economists who try to estimate actual growth tend to come up with lower numbers and while many believe that the current uptick is real, concerns remain that a lot of it is built on bad debt.”

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