Reflation trade benefits Central Europe’s currencies

2018 ◽  
Keyword(s):  
Monetary Policy ◽  
Global Economy ◽  
Emerging Market ◽  
Global Markets ◽  
Significant Deterioration ◽  
Content Type ◽  
The Past ◽  
Equity Funds ◽  
Business Confidence ◽  
Current Account Balances

Subject The outlook for the koruna, forint, zloty and leu. Significance Although emerging market (EM) bond and equity funds suffered heavy outflows in the week to February 14, the Czech koruna has barely budged against the dollar and the euro, after rallying sharply over the past few months. The Polish zloty and Hungarian forint have also remained stable, after enjoying sharp gains versus both currencies. The Romanian leu remains under pressure, owing partly to a significant deterioration in the country’s fiscal and current account balances. Impacts The surge in volatility in global markets in early February is abating partly because of strong economic and corporate fundamentals. Also, the global economy is enjoying its strongest synchronised expansion since 2010. The dollar will remain under significant strain despite the tightening of US monetary policy, with the dollar index at a three-year low. German business confidence, at a record high in January, is buoying sentiment across the euro-area and within export-dependent CE.

Relief of looser US monetary policy cannot mask risks

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Emerging Market ◽  
Futures Market ◽  
Oil Price ◽  
Content Type ◽  
European Elections ◽  
Economic Information ◽  
Equity Funds ◽  
Succession Process ◽  
The Interest Rate

Significance Following the meal, the Fed said Powell did not discuss monetary policy "except to stress that the path of policy will depend entirely on incoming economic information and what that means for the outlook". The futures market now sees a 75% chance that the interest rate will be unchanged in twelve months’ time, a substantial shift from late last year when at least two rate hikes were widely predicted for 2019. This shift is helping US equities to regain momentum. Impacts The flatter dollar this year is helping net inflows to emerging market bond and equity funds build momentum after large outflows in 2018. Further oil price upside may be limited; Venezuela’s small share of global output means sanctions will not greatly alter market dynamics. Mario Draghi’s ECB presidency ends in October; policy could be disrupted if European elections in May delay the succession process. US economic momentum is firmer than in the euro-area or Japan but less monetary policy divergence between them may help the euro and yen.

The risks surrounding ECB stimulus withdrawal are high

2018 ◽  
Keyword(s):  
Euro Area ◽  
Emerging Market ◽  
Content Type ◽  
Core Inflation ◽  
Bear Market ◽  
The Past ◽  
Downward Pressure ◽  
Export Competitiveness ◽  
Equity Funds ◽  
Equity Index

Subject Monetary divergence Significance After reaching multi-year highs in the second half of 2017, euro-area manufacturing and services surveys are now signposting slower growth. Meanwhile, euro strength is dampening inflation pressures. Thus the ECB will be cautious in its plans to ‘normalise’ its ultra-loose monetary policy. Impacts The euro has gained 15% against the dollar over the past twelve months; growing divergence with US policy will fuel further strength. Further euro strength is likely to put more downward pressure on euro-area core inflation and could damage export competitiveness. Markets are likely to remain volatile; the S&P 500 equity index is experiencing its second-most volatile year outside a bear market. Investors’ appetite for ‘risk assets’ will remain strong; 65 billion dollars has gone into emerging market bond and equity funds in 2018.

Emerging Europe markets will be strong in 2016

2015 ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Developing Economies ◽  
Emerging Market ◽  
Investor Sentiment ◽  
Commodity Prices ◽  
Oil Prices ◽  
Content Type ◽  
Central Eastern Europe ◽  
Equity Funds

Subject The prospects for Emerging Europe assets. Significance Despite record levels of outflows from emerging market (EM) bond and equity funds in 2015, the financial markets of Central-Eastern Europe (CEE) have remained remarkably resilient. They are likely to continue to outperform those of Latin America and Emerging Asia next year, because of a combination of relatively strong fundamentals and liquidity support from the ECB. Impacts Investor sentiment towards developing economies is now shaped almost entirely by dramatic declines in commodity prices. US monetary policy will now prove secondary to the plunge in oil prices. Growth in the CEE region picked up significantly this year and is still expected to remain relatively robust in 2016.

Effect of social capital on agribusiness diversification intention in the emerging market

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Le Dang Lang ◽  
Abhishek Behl ◽  
Nguyen Trung Dong ◽  
Yama Temouri ◽  
Nguyen Hong Thu
Keyword(s):  
Social Capital ◽  
Global Economy ◽  
Structural Equation ◽  
Emerging Market ◽  
Measurement Scale ◽  
Equation Modeling ◽  
Group Discussions ◽  
Content Type ◽  
Depth Interviews

PurposeCoronavirus disease 2019 (COVID-19) has seriously affected the global economy. How agribusinessmen are overcoming this crisis is being noticed in emerging markets. Using social capital to diversify agribusiness for getting more customers is a useful solution for the growth of agribusiness. However, there is a lack of evidence on the aggregate measurement scale of social capital and the influence of behavioral goals on the intention toward agribusiness diversification. Therefore, this study aims to develop an integrated measurement of social capital and investigate its effect on agribusiness diversification intention using the expanded theory of planned behavior (TPB).Design/methodology/approachA mixed-methods approach is used, including four in-depth interviews, three focus group discussions and two surveys. Structural equation modeling is applied to a sample of 484 respondents to test the proposed hypotheses.FindingsThe study shows the role of social capital in influencing the intention to diversify agribusiness under the premises of the resource-based view (RBV). The scale of social capital is also developed, which is the first integrated measurement of this asset. The findings contribute significantly to the existing knowledge of social capital, the TPB and diversifying agribusiness.Originality/valueThis is the first study to explore the comprehensive effect of the facets of social capital on behavioral intention through behavioral goals and determinants of the TPB under the premises of the RBV. The findings will help emerging economies, for example, Vietnam, where most farmers are family business owners or microscaled entrepreneurs in agriculture.

Emerging markets are now more resilient to US tapering

2021 ◽  
Keyword(s):  
Emerging Markets ◽  
Emerging Market ◽  
Bond Market ◽  
Oil Price ◽  
Inflation Expectations ◽  
Content Type ◽  
Dramatic Decline ◽  
Equity Funds

Significance The rise in yields is stirring memories of the 2013 ‘taper tantrum’, which led to a dramatic decline in emerging market (EM) currencies and local bonds, prompting three years of net outflows from EM debt and equity funds. Investor fears of US tightening have risen with growth and inflation expectations. Impacts If the trade-weighted dollar index rises further, this will threaten EM currencies, especially those with large dollar-denominated debts. The Brent oil price has gained 70% since November to USD68 per barrel but further upside is limited, with no commodities ‘supercycle’ ahead. Recent moves fuel fears of the normally staid US bond market becoming volatile; stable ten-year Chinese yields are being seen as a haven.

Determinants of stock market reaction to cross-border acquisitions: evidence from emerging economies

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Samta Jain ◽  
Smita Kashiramka ◽  
P. K. Jain
Keyword(s):  
Emerging Economies ◽  
Value Creation ◽  
Global Economy ◽  
Emerging Market ◽  
Research Work ◽  
Abnormal Returns ◽  
Content Type ◽  
Cross Border ◽  
Country Level ◽  
Acquiring Firms

PurposeThe global economy has witnessed an exponential increase in cross-border acquisitions (CBAs) by emerging market companies (EMCs), demanding a relook at their internationalization strategy. The purpose of the study is to investigate whether the announcement of CBAs by EMCs creates value for the equity-holders of acquiring firms and identify factors affecting the valuation of acquiring companies.Design/methodology/approachThe paper investigates the announcement impact of CBAs of CNX Nifty 500 Indian and SSE 380 Chinese companies. The event study analysis of 553 Indian and 125 Chinese acquisitions supports the contention that CBAs are indeed a strategic choice of EMCs for value creation.FindingsCBAs generate positive and statistically significant abnormal returns for shareholders of both Indian and Chinese acquirers. The markets, however, differ in terms of their motivations; country-level factors have been observed to exert significant influence on the returns of Indian acquirers. Indian companies experience larger value creation on acquiring firms established in developed, institutionally closer and/or economically distant markets. The findings support the asset-seeking motive of Indian companies.Originality/valueThe research work contributes to the evolving stream of CBAs literature with a focus on the globalization strategies of EMCs. The present study is a modest attempt to lay the foundation for a new theoretical framework (asset-seeking perspective) of overseas acquisitions from emerging economies. The existing studies on emerging economies have emphasized, in isolation, either Indian CBAs or international acquisitions by Chinese firms. Being so, the study is unique and original in the sense that it is a comparative study of India and China.

Private sector strengthens Africa regional ties

2015 ◽  
Keyword(s):  
Economic Policy ◽  
Private Sector ◽  
Private Equity ◽  
Emerging Market ◽  
African Continent ◽  
Content Type ◽  
The Past ◽  
Its Regions ◽  
Insurance Firms

Subject The role of the private sector in strengthening regional ties between African states. Significance Over the past decade, the African continent has experienced greater integration within and across its regions, especially through trade. While still lagging behind many other emerging market regions, this growth has been driven in large part by the private sector. More African companies are now expanding beyond the borders of their home countries. Private equity is playing an important role in funding this expansion, supporting companies with knowledge and experience to access broader markets. Impacts Commercial ties are pushing regulators to harmonise aspects of economic policy across borders, eg on banks and insurance firms. Longer-term integration projects -- eg African Central Bank and African Monetary Fund -- are unlikely to succeed. Firms from regional hegemons (Nigeria, Kenya and South Africa) will tend to have the greatest pan-Africa footprint.

Another rating upgrade is likely for Hungary soon

2016 ◽  
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Banking Sector ◽  
Credit Rating ◽  
Emerging Market ◽  
Investor Sentiment ◽  
Central Banks ◽  
The Philippines ◽  
Content Type ◽  
Investment Grade

Significance Hungary thereby regains investment-grade status, albeit at the lowest level, from being downgraded to 'junk' because of doubts about the government's policies and the high public debt burden. Hungary's improving creditworthiness, underpinned by its current account surplus and deleveraging in the banking sector, contrasts with the increasing strain on Poland's credit rating. Political risk has become a major driver of investor sentiment towards emerging markets. Impacts Emerging market assets have become more vulnerable as investors reprice US monetary policy. Futures markets are now assigning a 51% probability to another rise in US interest rates at or before the Federal Reserve's July meeting. Central Europe's government bond markets are being supported by the persistently dovish monetary policy stance of its central banks. This contrasts with Latin America, where inflationary pressures are forcing many central banks to raise rates. Brazil, Turkey, Poland and the Philippines are among several countries where political uncertainty is a key determinant of asset prices.

Macron is looking to enhance France’s industrial base

2019 ◽  
Keyword(s):  
Monetary Policy ◽  
Euro Area ◽  
Urban Areas ◽  
Manufacturing Sector ◽  
Foreign Investors ◽  
Social Unrest ◽  
Content Type ◽  
Industrial Base ◽  
The Past ◽  
Rural France

Subject France's manufacturing outlook. Significance France’s manufacturing sector has been the most attractive in Europe for foreign investors over the past ten years but the structural challenges within the sector, most notably the shift from manufacturing towards an economy based more on services, look set to deepen. Impacts Plans to reindustrialise parts of rural France may attract investment, but getting people to live there will be difficult. The ECB is likely to loosen monetary policy, and manufacturers borrowing at lower rates would boost euro-area industry. The threat of social unrest in urban areas may deter potential investors.

New Zealand’s Ardern will pursue more centrist agenda

2020 ◽  
Keyword(s):  
Monetary Policy ◽  
Financial Markets ◽  
Electoral System ◽  
Economic Recovery ◽  
Business Sector ◽  
Minimal Effect ◽  
National Party ◽  
Content Type ◽  
Minor Parties ◽  
Business Confidence

Significance Unlike in Labour’s first term, the party now no longer needs the support of minor parties to govern. Its 49% win is extraordinary given the mixed-member proportional electoral system and enables Ardern to implement her policies without seeking wider political consensus. Impacts Ardern’s win was widely anticipated, so it will have minimal effect on financial markets and business confidence. There is some agricultural and business-sector concern that the Greens will wield too much power if they are involved in government. New Zealand’s borders will remain closed for now: eliminating COVID-19 from the community is Ardern’s strategy. Ardern will invest in trades training and infrastructure, but aggressive monetary policy will still be key to economic recovery. The weakness of the centre-right National Party is letting the libertarian ACT New Zealand rise in popularity.

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