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Like a BAT out of hell

Weekly investor research

31 July 2017

The US Congress and the White House last week officially abandoned plans to implement a Border Adjustment Tax (BAT). This significantly reduces the risk associated with investing in Emerging Markets (EM) local bond markets, in our view. The official balance of power shifted sharply in favour of President Nicholas Maduro following the Constituent Assembly election in Venezuela. US sanctions against Russia are to be enshrined into US Law, but the impact on Russia’s ability and willingness to pay is miniscule, in our view. Pakistan’s Judiciary demonstrated that it has powers to remove the head of the government. India’s government turned to labour market reform as the state of Bihar fell under BJP control. In the global backdrop, the Federal Open Market Committee (FOMC) minutes were dovish and President Donald Trump confirmed that he wants a dovish Fed and a lower Dollar.

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