Tag Archives: emerging markets

A climate change accounting trick could save the planet

As more politicians become aware of the need to do something about climate change before we’re all swallowed by the oceans we came from, discussions are focusing on how to measure what countries are doing about it and what steps to take to contain it.

An accounting trick that could save the planet should perhaps be given more attention: adjusting each country’s gross domestic product data by the effect that particular country has on climate change.

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Beyond the Covid-19 crisis, forecasts may be too optimistic

The Covid-19 crisis is one year old, and already, on the economic front at least, optimism is gaining ground.

The International Monetary Fund (IMF) economic growth projections, released last week, point to a strong rebound: the world economy is forecast to expand by 6% this year, led by emerging and developing Asia, which is expected to grow by 8.6%.

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Emerging markets face three major headwinds

Emerging market assets have enjoyed robust performance despite the Covid-19 pandemic, with investors attracted by their higher yields and faster economic growth prospects in these countries.

But three headwinds could cut short their growth spurt: rising interest rates, environmental, social and governance (ESG) issues and the retreat of globalisation.

These headwinds are converging at a very delicate time for global markets, and at least two of them could persist for a long time.

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Investors should look for the gold of the future: forests

Probably not many people waking up next Sunday 21 March will be aware that it is the International Day of Forests — but they should be.

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The bad type of inflation is here

Despite good news about vaccine roll-outs, it is too early to tell when or even whether economies will fully reopen and life will go back to “normal.”

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Look at Covid-19 vaccines to gauge inflation tantrum odds

With news of another Covid-19 vaccine on its way and optimism rising ahead of the end-year holidays, it looks like 2021 will shape up to be much better than 2020.

But one forgotten danger could spoil the party: inflation. Price rises are far from investors’ minds, but an ‘inflation tantrum’ could have devastating effects on various countries’ economies if they are not kept in check.

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Pay emerging markets to help stop climate change

Among developed countries investors, there are various interpretations of the strength of the commitment to environmental, social and governance (ESG) factors in emerging markets, ranging from the cynical to the idealistic.

The cynical view would be that there can be no “real” ESG in emerging markets because too often they are plagued by corruption, therefore investors cannot trust what companies in these countries report.

The idealistic view, on the other hand, would see every little step towards introducing ESG as a wonderful sign that these countries are finally deciding to adopt the same values as Western democracies.

While both extremes are wrong, sadly even the moderate take misses the main difference between emerging markets and developed ones: the effect of development itself on ESG — and in particular on the “E”.

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Fast and furious rally risks triggering the Sell signal

The markets rallied so fast in November that bullish investors risk pushing the needle towards the “Sell” signal, according to Bank of America’s indicator.

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Emerging markets send two big warnings to investors

With the eyes on the US presidential election and the second wave of Covid-19, investors around the world can be forgiven if they have missed two important warnings from emerging markets.

However, with the election (almost) out of the way, it may be time to go through the rest of the news flow and think properly about the two events that may have been overlooked: the postponing of the world’s biggest stock listing (China’s Ant Group), and the firing of the governor of the Turkish central bank.

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Modern Monetary Theory is neither modern, nor new

If after the great financial crisis of 2007-2009 the word “extraordinary” characterised monetary policy, the Covid-19 pandemic calls for a much stronger adjective: “unprecedented”.

As the world has never before been faced with an instance when virtually all economic activity stopped for a certain period of time, this is an appropriate word. However, in monetary policy really very little can be said to be truly “unprecedented”.

For example, take modern monetary theory (MMT) — a theory about how to have your (monetary) cake and eat it, which (simplistically) states that if a country can print its own currency, that country will never default on its debt because it can create as much currency as it wants to and use it to pay back the debt.

Major central banks, to a certain degree, have already begun versions of MMT.

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