Each week Frontier Strategy Group’s global team shares their view on key media stories, and what the implications are for businesses that operate in emerging markets. For more information about how to contact our analysts, send us an email.
Mario Gutierrez on “Chile to Help Argentina Join Pacific Alliance”
“Argentina and Chile recently agreed to organize a major Mercosur, Pacific Alliance trade blocks’ meeting during the first half of 2017. Recently, the Chilean president Michelle Bachelet was in Buenos Aires with Mauricio Macri to address the feasibility of a joint commercial agenda that would open unprecedented business opportunities for both countries.”
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Cheng Siew Chua on “Don’t panic, ringgit will bounce back: Malaysian minister”
“The recent US interest rate hike caused significant volatility in emerging market currencies. The impact is more pronounced in the ringgit due to Malaysia’s open capital markets and large share of foreign held government bonds. Given that the Fed is expected to raise interest rates again in 2017, MNCs should hedge to minimize the negative impact of ringgit volatility on cash flows and earnings.”
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Mark McNamee on “Protesters block Polish parliament”
“MNCs should factor in significant currency volatility in their 2017 plans for Poland based on domestic political and fiscal risk issues, in addition to an anticipated stronger dollar. The Polish government remains intransigent in its illiberal stance on social issues while also viewed as increasingly irresponsible fiscally, undermining the strength of the zloty.”
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Natalia Duarte on “Venezuela Extends Use of 100-Bolivar Bill to Halt Looting, Riots”
“After declaring that the country’s most popular bill would be pulled from circulation, President Maduro has extended the use of the 100-bolivar until Jan 2 given the chaos that has ensued. As expected, the higher-denomination replacements (500-20,000 bolivars) intended to enter into circulation on Dec 15 are not ready. Venezuela’s border with Brazil and Colombia will also remain closed until Jan 2.”
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Athanasia Kokkinogeni on “Italy approves a €20bn bailout plan for its banks”
“PM Gentiloni’s government approved a € 20 billion bail-out for the weak Italian banks to be used in case Monte dei Paschi di Siena’s (MPS) private recapitalization fails this week. Although the government claims that the private recapitalization can still succeed, MNCs should be prepared for a MPS bail-out scenario leading to some losses for high-profile investors and further weakening of the euro”
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William Attwell on “Dlamini-Zuma delivers ‘state of the continent’ address”
“The address is not a usual part of the AU chair’s calendar, and should instead be interpreted as part of a strategy to build Dlamini-Zuma’s profile ahead of the ruling party’s congress in December 2017, when she is expected to contest the party’s leadership, succeeding her ex-husband President Jacob Zuma. However, she faces stiff competition from the current deputy president, Cyril Ramaphosa.”