What Our Analysts Are Reading – 12/7/2018

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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.

Ramiro Sugranes on “Venezuela signs oil, gold investment deals with Russia: Maduro – Reuters

“President Maduro has announced that Venezuela has secured US$ 6 billion in investments from Russia in the country’s oil and gold sectors. The cash-strapped government has continued to become increasingly reliant on geopolitical allies for financing as oil production tumbles. MNCs should expect that Maduro will persistently pursue external rescues as the government’s financial lifeline dwindles.

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Josef Jelinek on “Yuan Wins Temporary Reprieve on Tariff Time-Out”

“The strengthening of the yuan on the back of an announced ceasefire between the US and China in their trade war will be short lived. A multi-year financial deleveraging campaign has led to a China slowdown, which will not be averted by the truce. Weakening domestic fundamentals, falling net capital inflows, and a divergent monetary policy will continue to put depreciatory pressure on the RMB.

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athanasia-kokkinogeniAthanasia Kokkinogeni on “Brexit: Ministers facing ‘contempt’ vote ahead of big debate”

“The UK government faced today a contempt vote regarding the legal advice on Brexit it chose not to disclose. What the MPs are eyeing to achieve with this motion is more clarity on the UK withdrawal terms from the EU, and most importantly an ending date of the transitional deal and the adherence to the EU customs union. Political volatility remains high, challenging MNCs’ UK strategic planning.

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Alex Schober on “YPF and Malaysia’s Petronas committed to invest US$ 2.3bn in Vaca Muerta

“Argentina’s long term growth potential will heavily depend on investment and the eventual production of natural gas and petroleum in Vaca Muerta. YPF and Petronas agreed to a US$ 2.3 billion investment to produce at La Amarga Chica, which will become the second largest shale play in Argentina. This could increase Argentina’s oil production by 15% by 2022.

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Ryan Connelly on “Foreign Steel Keeps Flowing Into U.S. Despite Tariffs

“A tariff is a tax paid for by the consumer. From a pricing perspective, the impact is not that different from other consumption taxes like a VAT. Firms can take some of the tax into their margins, or firms can try to pass on the cost increase. Consumption taxes lowers total demand and/or profitability over the medium term, but in the midst of strong US growth, demand has increased despite prices.

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

William Attwell on “South Africa emerges from recession as farming, manufacturing jump

“GDP data indicating South Africa’s economy has emerged from its H1 recession will be welcome news for MNCs. Markets responded positively, with rand strengthening a full percentage point against the dollar following the announcement. While we expect mild growth acceleration in 2019, MNCs should be mindful of South Africa’s heavy exposure to global downside risks.

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

Mark McNameeMark McNamee on “Ukraine resumes grain shipments from Azov Sea

“This marks a significant de-escalation of the conflict, which still remains tense but is likely to now moderate. It remains unclear exactly how the Kremlin benefits from the standoff, while risking the threat of even harsher Western sanctions. Shipping in the Azov Sea is likely to remain a potential flashpoint in 2019 but should not destabilize the current conflict in Ukraine’s east.

Link to article | Read More of Mark’s Commentary | Have a Question for Mark?

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