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A flood always starts with a trickle…

Weekly investor research

08 August 2016

In the global backdrop section we discuss Japan’s return to debt stimulus. What started as a trickle in Tokyo is likely to become a flood across developed economies and the ramifications are not good for holders of fixed income in those countries. Meanwhile, in EM the big story last week was the Indian Senate’s approval of a major tax reform, which, to all intents and purposes, creates a single market in that country. In China, financial reforms continue with the planned launch of CDS markets and issuance in SDRs ahead of China’s inclusion in the global reserve currency basket in October of this year. Indonesia gears up for reforms following the appointment of Sri Mulyani as Finance Minister and Thailand’s voters approve a new constitution that puts the country on track for a return to democracy next year. In Brazil, the impeachment of President Dilma Rousseff is set to kick off in the Senate this week, while formal inflation targeting is just around the corner in Argentina. The Venezuelan Cabinet reshuffle was a setback to reformers, but probably does not change the government’s willingness to pay. Finally, we discuss South Africa’s local elections, which delivered a bloody nose to the ANC.

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