For more information please contact us
ashmail [at] ashmoregroup [dot] com (Email Ashmore)
Brazil’s 2017 super-goldilocks constellation
Weekly investor research
05 December 2016
In the global backdrop section we offer an answer to the question of how far US yields can rise before the US economy gets hurt. This question is obviously key to fixed income investments, including the EM variety. The answer is that mortgage applications have already started to decline (by 1/3) and the US is unlikely to be able to generate the growth required to sustain current consumption levels even if yields go up by just 100bps. Meanwhile, there are many moving parts in EM. Brazil’s parliament tried to pass a ‘get out of jail’ card for itself, but was rebuffed sharply by the Supreme Court. Zuma survived an attempt to remove him from the South African presidency and South Africa survived the threat of a downgrade to junk. Colombia’s President Juan Manuel Santos wrote his name into the history books at Colombia’s parliament approved the FARC peace deal. In addition, we cover Mexico’s larger than life central bank governor’s departure for Basel, PDVSA’s (late) debt service and Turkey’s preparation for constitutional reform. We also wish to remind investors that there is a difference between extending regulatory oversight and clamping down on capital account flows, even in China, while India racks up another +7% growth quarter.