Analysing and investing in Frontier Emerging Markets usually comes with its fair share of challenges; often, these are centred on availability or quality of data, news, language barriers, and finally, accessibility. Gabon is a great example of how these challenges can distort the real opportunities before us, and progress made on key initiatives.
The concern over high interest rates in Brazil is understandable. It impacts the public coffers in favour of the richest and discourages productive investment. Many analysts argue that the interest rate is too high, and that the main reason for its inaction is pressure from special interest groups, notably the financial market. Although this argument is seductive for its simplicity, it does not jibe with the complexity of the theme.
The success of Kuwait’s debut US$8bn Eurobond proves that even in the credit markets, playing hard to get is a tactic that nets results, especially when surrounded by bigger and wealthier competitors vying for investors’ attention.
Russia spent much of last year bolstering its ties to the Chinese economy in the hopes of tapping into Asian liquidity through the capital markets, most recently revealing plans to set up a Russian Central Bank outpost in Beijing. The move is a fairly sizable leap towards Russia’s first sovereign yuan-denominated issuance, and a signal that it is still keen to hedge against bets that its relationship with Western powers would improve with Trump in the White House and Europe in relative disarray.
China is making good on its promise of opening up its onshore markets to foreign investors, which only own about 2% of the country’s domestic bonds. With broad index inclusion on the horizon and the introduction of new rules aimed at easing investor access to the market paying off, analysts are turning their attention to concerns over monetary tightening and slower than anticipated growth for 2017.
Inflation targets are widely used by Central Banks throughout the world. In countries with moderate inflation, this regime helps keep inflation well behaved, with less cost to economic activity. In countries with low inflation, the risk of deflation can be mitigated by setting a suitable target. This targeting also makes monetary policy more predictable, contributing to a stable economic environment, but defining an ideal target is an imperfect science at best.
Having weathered most of 2016 quite well, Kenya faces a number of domestic and external headwinds including a prolonged drought and increasing uncertainty around the future policy direction in the US, UK and Europe. But Patrick Njoroge, Governor of the Central Bank of Kenya believes some of these challenges also present opportunities – to explore further East African policy integration, double down on helping banks navigate new challenges, and facilitate the development of new and innovative financial instruments like green bonds.
Few currencies have suffered more since the surprise election of Donald Trump last year than the Mexican peso. Trump made Mexico a cornerstone of his electoral campaign and attacked the Central American country on a number of issues ranging from illegal immigration to the renegotiation of the North American Trade Agreement (NAFTA), which put increasing pressure on the country’s currency and drove the country’s Central Bank to take drastic measures. Will the gambit pay off?
Hamstrung by a deficit twice the size of that estimated by the government of former President of Ghana John Mahama, all eyes are on how the newly elected President Nana Akufo-Addo and his right-hand man, Finance Minister Ken Ofori-Atta, navigate delivering key fiscal consolidation reforms and keep voters happy. With the economy on the mend, things are looking up – but the road ahead is riddled with risks.
Cities have the power to transform themselves and raise the standard of living for their inhabitants, but in Africa many have struggled in this endeavor due to lack of access to financing. To get a sense of how we can succeed, it is important to assess how others have failed. Here is a first-hand glimpse of the unsuccessful launch of West Africa’s first city-level bond.
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- Supporting Peru’s Infrastructure Pipeline: Camilo Carrillo Purín, Ministry of Economy and Finance
- Chile’s Euroclearance Raises Hope of Attracting Foreign Capital
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