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World economy 18th December 2014

A buying opportunity in EM equities?

ZURICH | UBS analysts | It is too early to buy Russian equities in our view. The failure of the Russian Central Bank to ‘back up’ yesterday’s aggressive rate hike with enough intervention to stabilize the Ruble means currency and market risk is likely not over. The Russian market needs the oil price and the Ruble to bottom out for a sustained rally to begin. MSCI Russia trades at just over 3x forward earnings (v. a long term average of 7.2x), but this is based on a consensus EPS forecast for 2015 of -1% – almost certainly far too high.

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World economy 16th December 2014

Abenomics: “Third arrow” as a necessary condition for trickle-down effects

LONDON | Barclays analysts | The post-election challenge for Abenomics will be how to promote a transition from a favourable turn in expectations to the real economy (real GDP). For example, JPY depreciation has boosted earnings and led to an improvement in business sentiment (expectations), but export volume remains sluggish, suggesting it has not given a boost to the real economy (real GDP). 

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World economy 12th December 2014

The Fed’s motto: Mistakes should be repeated!

SAO PAULO | By Marcus Nunes via Historinhas | Fed officials have great difficulty in thinking outside the box, ceaselessly repeating themselves. If they stopped to think for a moment they would see what´s very different now from what presented itself ten years ago. And the significant difference is not in the rate of inflation or the rate of unemployment, but in the level trend and growth rate of nominal spending

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World economy 11th December 2014

What are the upside risks for EM in 2015?

ZURICH | UBS analysts | We have painted a fairly sombre picture for emerging markets assets next year. Our base case is that EM debt will generate returns of 0-2%, while EM equities should yield 5-7% returns for USD based investors. The main thesis that underlies this view is that the growth alpha between EM and DM will fall further, with sluggishness in exports a critical concern.

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World economy 9th December 2014

Retail traditions hit a wall at Wal-Mart China

BEIJING | By Li Xuena via Caixin | Zhong Shidan started climbing the Wal-Mart career ladder 18 years ago after she joined the U.S. retail giant’s Shenzhen outlet as a shop assistant. Today, Zhong holds a high-level operations department position and oversees the company’s more than 80,000 employees in China. She goes by the English name Grace and works hard to reflect well on Wal-Mart as an executive who is persistent, smart and focused.

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World economy 9th December 2014

Oil hits five-year low on oversupply worries

MADRID | The Corner | Benchmark Brent crude dived on Tuesday to its lowest in five years, plummeting below $66 a barrel after plunging more than 4 percent the day before on worries of a swelling supply glut, according to Reuters. Oil prices are likely to remain around $65/barrel for the next six or seven months, the chief of Kuwait’s national oil company said on Monday, in the latest sign that Gulf producers are ready to ride out plunging prices. According to experts at Link, this could lead to tensions on the money markets.

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World economy 5th December 2014

TTIP: Germany’s got the upper hand

BERLIN | By Alberto Lozano | The Transatlantic Trade and Investment Partnership (TTIP) is being negotiated between the European Commission and the United States in Brussels. Once again, Germany, as Europe’s economic and political powerhouse, could have the last word on its contents and approval.