China has been increasingly opening up to the global market. Last year the Renminbi was taken into the currency basket of the International Monetary Fund in October 2016. Now, another step towards liberalisation has followed. China has cleared A-shares for international trade via trading platforms.
Last Thursday, incriminating video and audio tapes emerged that linked current President Michel Temer to bribery. The accusations have thrown Brazil into a deep political crisis, and the capital markets have lost massively.
Author: Sevda Sarp
After the ballots were counted on 16 April 2017, the state-run Anadolu news agency reported that “Yes” had won by securing 51.4% of the votes, which was later also confirmed by the Electoral Commission. Serious concerns were raised by the OSCE. It is also important to note that the referendum took place during a “state of emergency”. That is to say, in a highly repressive climate in which the President and the government controlled the media, jailed critical journalists and leaders of pro-Kurdish parliamentary opposition, and arbitrarily detained and prosecuted the President’s opponents. The result of the referendum has paved the way for the most controversial changes that Turkey has faced in its history.
Author: Felix Dornaus
Senior Fund Manager
The spring meeting of the International Monetary Fund was held in Washington from 20th to 23rd April. This event was the reason for an investor conference that I attended in order to get an idea of the status quo of the global economy as well as of risks and opportunities.
Author: Amalia Ripfl
Senior Fund Manager
A “Yes” to Erdogan’s planned constitutional amendment in Turkey would constitute a double-edged sword for investors: the planned presidential system could mean a short-term relief for the markets and for the economy. However, in the long run, this scenario harbours big risks. That being said, a “No” would not help investors either.
Three and a half years after introduction, the Czech National Bank decided today to remove its 27 CZK/EUR currency floor. Many investors were expecting this decision. Indeed, this trade is currently one of the most popular ones among investors. As expected, the Czech koruna appreciated slightly against the Euro. In the short term the currency will remain volatile, as a lot of speculative money is involved. In the long run I expect that the Czech koruna will continue to appreciate given the strong fundamentals of the Czech economy.
The stock exchanges in the emerging economies and their performances have fallen short of expectations in recent years. Speculations about the weakening economy of China, the decline of commodity prices, and an appreciating US dollar have had a detrimental effect on emerging markets. However, the trust of investors in these markets has been making a comeback since 2016. In spite of Donald Trump’s election victory and the fear of a US policy of protectionism, the emerging economies are currently outperforming the developed ones.
Christian Gaier, Head of Fixed Income Rates, Sovereigns & FX, Erste AM
I would like to share my impressions from my latest investor conference in London that I attended on 16th January 2017. The conference was organized by Banco Bilbao Vizcaya Argentaria (BBVA), a leading global financial group with a strong franchise in 35 countries and a leading position in the Spanish market and in Mexico. For us, a perfect partner when it comes to research on countries and companies in Latin America (LATAM).
2016 was full of surprises on the stock exchanges. At the beginning of the year, economic concerns in China, the second-biggest economy in the world, triggered drastic losses on the stock exchanges. Over the year, cautious optimism gradually returned: the oil price recovered, and the stock exchanges in the emerging markets rebounded. Brexit and Donald Trump failed to affect the sentiment of market players. Instead, the global equity barometer rose particularly in the second half of the year by a large degree (see the chart below). With the help of cyclical companies and financials, which often command heavy weightings, especially US-stock markets set new highs. The development of European and Asian exchanges was relatively disappointing.
Turkey faced a lot of difficulties in 2016 – both on the economic and political side. On the economic front, the first half of the year was a recovery period where most of the macro data showed improvement, political turmoil had diminished and equity market was pretty much on hold while the market participants had positive views in general. A new Prime Minister and a new Governor for the Central Bank was appointed, who started his term with a positive tone with respect to Monetary Policy. On the other hand, in the second half of the year Turkey had to cope with a lot of turmoil.