June 27, 2014 By Leave a Comment

Emerging Market View: What Our Analysts Are Reading

Emerging Market View What our analysts are reading

Much like the US soccer team advancing in the World Cup despite a loss to Germany in yesterday’s game, Brazil’s economic outlook (regardless of the economic angst in recent years) seems to be catching a break as well - and it’s about time.

“Brazil still offers a significant amount of untapped opportunities in most sectors, especially in relatively faster-growing regions in the North and Northeast. Successful multinationals stress the need to focus on the long-term,” according to Pablo Gonzalez, Senior Analyst for Brazil after reading an article published by the FT.

FSG’s clients are encouraged to read further on how to make the case for Brazil, our latest report which identifies the opportunities and long-term factors that continue to make Brazil a good bet for multinationals. Also in the news lately is the rising cost of energy, a topic of recent concern given the unrest in the Middle East. The Wall Street Journal reports that higher oil prices are casting a shadow over emerging markets.

“Higher energy prices disproportionately affect emerging market consumers and economies. The increase in oil prices as a result of the rising political risk premium from the conflict in Iraq could spell trouble for emerging markets that are large importers of oil or already experiencing decelerating growth,” says Sam Osborn, Associate Practice Leader for FSG’s global analytics.

An example of impact follows Turkey’s recent decision to cut interest rates again.

“The interest rate cut will be helpful to local businesses but will fuel inflation. Rising energy prices because of the situation in Iraq are already affecting transportation costs, and the central bank will struggle to contain them with lower interest rates. As a result, MNCs can expect consumers to be squeezed for at least several more months,” says Martina Bozadzhieva, Head of EMEA Research at FSG.

However, Iraq is not the only concern:

FSG clients should review more analyses of rising energy prices here.​

Filed Under: Global, Uncategorized Tagged With: , , , ,
March 28, 2014 By Leave a Comment

Emerging Market View: What Our Analysts Are Reading

EM View

Among the many headlines and articles circulating global news, we are reminded of volatility’s inherent presence in emerging markets. Antonio Martinez (@antoniojosemc), Senior Analyst for Latin America has been keeping a close eye on developments in Venezuela, one of Latin America’s lowest performing economies in recent years. Good news is hard to derive from Bloomberg’s article on Venezuela’s Bolivar taking a hit on the black market. Antonio comments that the, “SICAD2 will not resolve the distortions in the exchange rate market unless there is sufficient volume of dollars on offer. Continued delays in resolving the foreign exchange rate system will only make the eventual necessary adjustment more economically and politically painful.” Combating the dismal news for Venezuela, Antonio recently authored FSG’s Central America Regional Overview, as well as a blog post which outline opportunities in Central America.

The EMEA portfolio is certainly no exception to volatility either. Following German businesses’ growing concerns over Russian ties, Martina Bozadzhieva, Head of EMEA Research advises that, “MNCs need to prepare for further downside risks to Russia’s performance. Regional teams should work to assess the real impact of sanctions on their business and manage corporate’s perceptions about risk to avoid a costly pullout of resources from the market that could undermine their competitive standing.”

And finally from the APAC perspective, The Hindu reports the Reserve Bank of India (RBI) is likely to hold rates. According to FSG’s Shishir Sinha, “the Reserve Bank of India is unlikely to cut rates in its forthcoming monetary policy on April 1 even though economic conditions seem to have eased recently with some moderation in inflation and financial market stability, thanks to the election euphoria.”

Filed Under: Global, Uncategorized Tagged With:
March 1, 2013 By Leave a Comment

Emerging Market View: What Our Analysts Are Reading – 3/1/2013

Many of this week’s US headlines primarily focused on the the imminent United States government sequestration. In addition to following those developments, our research talent kept an eye on headlines pertaining to emerging markets, too. Below are some headlines with FSG research analyst commentary:

Bloomberg News reported that Emerging Stocks Erase Weekly Gain on China, Commodities:

“Today’s headlines highlight the US budget sequester’s ripple effect on emerging-market growth. That could incrementally diminish the opportunities for MNCs in some EMs, but it doesn’t change the fundamentals. We are more concerned that US-based MNCs will react to economic mismanagement at home by remaining overly risk-averse abroad, allowing local competitors to capture yet more market share.”
- Joel Whitaker, Senior Vice President and Head of Global Research

The Wall Street Journal’s Deal Journal blog posted Doubts Over Returns Hit Fundraising in China:

“Look beyond headline GDP to gauge China’s economic performance. Look at corporate profits in China and return of PE investment is a good indicator.”
- Shijie Chen, Research Practice Leader for Asia Pacific

From Reuters - Brazil may use imports to curb inflation:

“Offhand comments by Brazil’s finance minister raise the possibility that the country could drop import tariffs in sectors and on goods where local producers have been raising prices aggressively. This would be a 180 turn from years past, when Brazil raised tariffs on imported goods in industries impacted by cheaper imports due to a strong currency.”
- Clinton Carter, Director of Research for Latin America

And lastly, another article from Reuters - Russia says central bank independence not at risk:

As CEE governments struggle to boost growth without increasing fiscal deficits, they are increasingly pushing regional central banks to cut interest rates, even at the expense of undermining the banks’ independence. This is a trend to watch in 2013, especially in Russia where reduced central bank autonomy could significantly undermine investor confidence.”
- Martina Bozadzhieva, Senior Analyst for Central and Eastern Europe

 

Filed Under: Asia Pacific, Channel Management, Consumer Goods, Europe Middle East Africa, Growth Planning, Healthcare, Industrial, Latin America, Organizational Effectiveness, Technology Tagged With: , , , , , , , , ,