EM ended the week on a mixed note after posting strong post-FOMC gains. The bounce in risk seems likely to continue this week, with little on the horizon to derail it. Specific country risk remains in play, however, with heightened political concerns in Brazil and South Africa.
A perfect storm of rising oil prices and limited corporate profits is leading to higher inflation expectations for 2016. Oil prices have rebounded from their 2016 lows, rising to $38.95 a barrel on Monday morning trading. With higher oil, gas prices have already risen in the U.S., and higher prices are expected. Gas price averages have increased from their recent lows to top $2.00 per gallon, according to Gasbuddy.com, a gas price tracking company.
In the EM equity space, China (+5.1%), South Africa (+3.8%), and Turkey (+3.6%) have outperformed this week, while Thailand (-0.7%), Qatar (-0.7%), and Colombia (-0.3%) have underperformed. To put this in better context, MSCI EM rose 3.3% this week while MSCI DM rose 1.2%.
Not long ago, the Malaysian government thought that mastery of the internet was a path towards economic development. In February 1996, it launched the Multimedia Super Corridor (MSC), essentially a special economic zone, to entice high-technology corporations like Microsoft to set up shop in Malaysia.
China has developed the largest high-speed rail network in the world, a feat for which it should be rightly proud. Unfortunately, cutting-edge transportation technology is expensive to deploy and maintain.
A nation with the world’s second largest economy and single largest population needs to build additional high-speed rail to support its burgeoning infrastructure. As a result, China has asked the World Bank for suggestions on how it can finance further development.
Stock markets in Asia and Europe joined America’s market in celebrating Janet Yellen’s admission that the global economy is not doing so well.
The Federal Reserve announced on Wednesday that the central bank would not raise rates more than twice in 2016, and that it would target a 0.9% Federal funds rate by the end of the year. That is down from previous guidance of 1.4%, as the Fed also downgraded its GDP growth expectations for 2016.
Since West Papua’s integration into Indonesia in 1969 through a United Nations-sponsored people’s referendum — a process considered deeply flawed — the Papuans’ problems have haunted all Indonesian presidents.
A critical juncture came after the downfall of the authoritarian regime of former general Suharto. Beginning in 2002, President Megawati Sukarnoputri’s administration implemented the Papuan Provinces Special Autonomy Law, which aimed to give Papuans more authority to manage their affairs based on local customs.
Today, Europe is struggling with a series of old and new challenges. Hard choices can no longer be deferred. For half a decade, Europe has struggled with excessive debt (which remains excessively high), fiscal adjustment (which has failed to revive the continent), systemic banking vulnerabilities (which have not been nullified), and competitiveness challenges (which are worsening due to R&D cuts across the core economies).
The dispute over China’s “market economy status” (MES) divides Europe by countries and industries. It stems from China’s 2001 agreement to join the World Trade Organisation (WTO), which Beijing believes required countries to grant MES to China within 15 years – by December this year.
Unemployment levels have fallen to less than 7% in all 50 states, but demand for goods and services remains weak as incomes refuse to grow.
A new report by the Bureau of Labor Statistics found that unemployment fell in 28 states from December to January 2016, while non-farm payroll employment rose in 30 states and Washington D.C. The improvements helped the U.S. headline unemployment rate, which fell 0.8% from a year ago to 4.9%.
