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A peak into the future

Weekly investor research

17 November 2014

If you are looking for a crystal ball to help you form a view about the future look no further than Japan and Korea. Both countries offer a great insight about the currency dynamics that are likely – within a few years – to play out on a far larger scale between the HIDCs (Heavily Indebted Developed Countries) and Emerging Markets (EM). We also take a look at the IMF’s recently released World Economic Outlook database, which shows that EM is now 56% of global GDP en route to a 60% share by 2020. It continues to be a source of amusement, frustration and sheer incredulity that the global financial markets continue to view EM as fragile and vulnerable. In fact, EM represents a large and highly diverse group of countries that, on average, have massively stronger fundamentals than the HIDCs. We discuss the better than expected third quarter growth numbers out of Russia and other Eastern European countries, changes in China’s tax treatment of users of the Shanghai-Hong Kong Stock Connect and other country specific goodies.

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