What Our Analysts Are Reading – 10/5/2018

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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.

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Alejandro Valerio on “Peru annuls ex-leader Fujimori’s pardon and orders his capture

“Peru’s former president Alberto Fujimori’s pardon was annulled by a judge yesterday. This event will increase tension between Fuerza Popular, the leading opposition party led by Keiko Fujimori, and President Vizcarra. FSG does not believe it will stall the reforms that Vizcarra proposed to change Congress’s structure and judicial branch, which are set to be approved in a referendum in December.

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Mark McNameeMark McNamee on “Putin Signs Controversial Pension Age Law

“There was no surprise in Putin’s approval of the controversial pension reform, which was adroitly proposed and adopted following March presidential elections. MNCs can expect some minor protests in the aftermath; however, the public’s willingness to protest has subsided considerably after the large-scale demonstrations earlier this summer.

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Ryan Connelly on “Sovereign bond sell-off spreads worldwide”

“As summarized in our Global Outlook for 2019, FSG believes that monetary tightening across developed markets will spread to global monetary tightening. Central Banks in Emerging Markets will need to respond with tighter domestic interest rates or capital controls, or face a depreciation of their currency. In extremes, countries and firms in EMs may face liquidity issues. Firms should prepare.

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athanasia-kokkinogeniAthanasia Kokkinogeni on “​Eurozone battles Italy as EU budget row deepens

“The Italian government is expected to respect in broad terms EU’s deficit rules, but MNCs should keep an eye for a downside by October 15, weighing on 2019 growth. Italy’s ten-year bond yield climbed in light of an EU-Italy clash. The government’s prior commitments to increase spending and cut taxes is likely to be introduced gradually and financed through spending cuts and tax-break reversals.

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Alex Schober on “”Plan Sandleris” begins: 10 keys to Argentina’s new monetary policy to control the exchange rate and combat inflation

“MNCs should expect slightly less exchange rate volatility and the eventual deceleration of inflation as a result of Argentina’s new exchange rate and monetary policies. The main elements are changing the free floating exchange rate regime to a crawling peg, reducing the growth of the country’s monetary base to 0% until July 2019, and eliminating short-term commercial paper (Lebac) by December.

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