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Impunity in retreat
Weekly investor research
09 April 2018
The imprisonment of former Brazilian President Lula for corruption-related crimes is only the latest in a growing list of examples of Emerging Markets (EM) leaders being held to account for misdeeds. Impunity is in retreat in EM. While this observation does not apply to all countries in EM, the retreat of impunity is nevertheless one of the broad trends in EM with origins in the end of the Cold War and the rise of the Middle Class. We therefore expect the trend to continue and to strengthen over time. In country-specific news, the US sanctioned more rich Russians, Ecuador put forward a bold fiscal plan, India opened its bond market further to foreign investors and Viktor Orban scored yet another solid election win on the back of the European Union’s inability to define effective border and immigration policies. In the global backdrop, Trump’s escalation of his Trade War with China created uncertainty in the global backdrop, weighing on EM stocks and currencies.