Europe/Middle East

Foreign Direct Investment in Troubled Ukraine

Domestic policy crisis, Crimea’s loss, war in the south-east of Ukraine, and Russia’s aggression amid the lack of any thorough economic reforms and a single decision making unit built-up in Kyiv have triggered Ukraine’s loss of direct foreign investment in the first nine months of 2014. Over this period, Ukraine has lost 16.6% of all direct foreign investments raised to the economy from the date of independence. It accounts for USD 9.6 billion in monetary terms.

Greek Election Fallout and European Asset Values

The failure of Greek Prime Minister Samaras to secure sufficient votes in the third and final parliamentary attempt to select a new president has sparked a sell-off in European stocks and peripheral bonds.  Up until now, the contagion from Greece has been remarkably limited.  Perhaps the thin holiday markets have exaggerated the knock-on effects.  At the same time, the fear that the Greek election will morph a Greek exit from monetary union is palpable.

For Cypriots, a Glimmer of Hope?

The nightmare for Cyprus started in March 2013. The country’s banking sector faced a sudden squeeze. The two biggest players – Bank of Cyprus and Marfin Laiki Bank – were in danger of a collapse which would have sparked a huge negative shock for the island’s economy.

Russia - Caught in a Perfect Storm

2015 might not be a very pleasant one for Russia. The country faces the worst of financial failures since 1998. The Ukraine conflict, exclusion from G8, western sanctions; a high inflation, falling GDP growth and rising unemployment had already been heating the economy. But with the falling oil prices and domestic currency losing its value, Russia got caught in a perfect storm.

Implications of a Syriza Win in Greece

The Greek economy, after five years of recession, has nearly reached the top of the hill it has been climbing. But there is a real threat that in just a few months it will roll back down again.

Russia's Slippery Slope

Winston Churchill famously said of Russian foreign policy that it was "...a riddle, wrapped in a mystery, inside an enigma."  What people leave out is what followed.  Churchill offered an answer:  "... perhaps there is a key. That key is Russian national interest."

And so it is.

Ukraine's Economy and the Technocrat Elite

Ten years ago, it was received wisdom in western academic, business and policy circles that Ukraine was an archetypal “captured state” – a state owned and run almost entirely by a small, insecure and fabulously rich elite.

Of course, despite the cloak of academic respectability, the complaint from the West was not so much that the Ukrainian state was captured, but rather that it had been captured by the wrong people.

Early Signs of Cracks Showing in Norway's Economy

New oil projects are being scrapped in Norway amid falling production and low oil prices. 

Long held up as the model for managing oil abundance, Norway has painstakingly sought to prevent the problems that occur with other natural resource-based economies, such as corruption, slow economic growth, currency appreciation, and subsequently, deindustrialization. 

Will Greek Politics Trump Principles in Upcoming Elections?

Many global investors limited to investment grade markets or developed markets, as defined by MSCI have no direct exposure to Greece.  Nevertheless, recent developments in Greece are worrisome to investors.  Many fear that the political challenges in Greece could lead to its ultimate exit from the monetary union and default.    

This concern has led to dramatic losses in Greek bonds and stocks.  Today's decline in Greek stocks (10.2%) is the largest since 1987.  The 70 bp rise in the benchmark 10-year yield is among the largest of the year.