What Our Analysts Are Reading – 11/23/2018

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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.

Ryan Connelly on “Trump’s trade hawk prepares to swoop on Beijing

“Robert Lighthizer is the architect of Trump’s trade policy. This article provides further support to two of our key views at FSG: First, that China will not offer anything that will satisfy Lighthizer’s demands at the G20 in November. Trump has tended to listen to Lighthizer. Second, as the Sherrod Brown (a Democratic Presidential candidate quote in this article shows, there is bipartisan support).

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Alejandro Valerio on “Mexico to Cancel $13.3 Billion Mexico City Airport Project (NAIM)

“After the “public consultation” on the NAIM and its subsequent cancellation by President-elect López Obrador (AMLO), legal uncertainty will affect the financing of the key projects AMLO has announced, such as the modernization of six oil refineries and the Mayan train. Investors will be reluctant to invest in large-scale projects that are exposed to either delays or cancellation via “referendums.”

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Josef Jelinek on “Exclusive: China offer unlikely to spur major trade breakthrough – senior U.S. official”

“Presidents Donald Trump and Xi Jinping are due to hold talks at the G20 summit to be held in Argentina at the end of the month. However, China’s written response to US demands for trade reforms is unlikely to satisfy the Trump administration. Items included in China’s non-negotiable list are unacceptable to the US, and many pledges are a rehash of previous promises that have not been fulfilled.

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athanasia-kokkinogeniAthanasia Kokkinogeni on “Macron’s symbolic win on eurozone budget masks stalling EU reforms”

“In response to slow reforms and milder growth, French president Emmanuel Macron and German Chancellor Angela Merkel agree on a 2021 eurozone budget. Whereas only countries using the euro are expected to contribute, all EU members should approve it. This development is aligned with FSG’s disruptor ‘Deeper eurozone Integration’ as part of our WEUR Regional Outlook 2019, driving stronger sentiment.

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Zeynep Kosereisoglu on “Some Saudi royals turn against crown prince, Reuters sources say

“Executives should monitor signposts of discontent against the crown prince. A change in the succession plan is unlikely in the short term. However, in the case of a political disruption, outflows of foreign capital and its pressures on the riyal, the impact on oil prices and the potential disruptions to the government’s reform pace will be the key points to monitor.

Link to article | Read More of Zeynep’s CommentaryHave a Question for Zeynep?

Martin Belchev on “Set of Tax Changes Presented in Croatian Parliament

“In the latest iteration of the new tax reform, the Croatian government introduced expanded list of goods that will benefit from the reduced VAT rates of 5% and 13%, which includes food items and will cover all pharmaceuticals. This should reduce inflationary pressures, boost consumer demand and will give B2C MNCs and their partners more leeway in setting up their pricing strategy in 2019.

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Alex Schober on “Deceleration confirmed: Chile’s real GDP grew by 2.8% in Q3

“Chile’s economy showed its slowest growth of the year at 2.8% YOY in the third quarter. This adds conviction to FSG’s claim that the government needs to successfully approve tax and pension reforms in the next few months in order to boost consumption and investment numbers. On the other hand, investment expanded relatively strongly in Q3 at 7.1%, and Chile’s 2018 YTD GDP number stands at 4.2%.

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