7 May to 14 May: One size does not fit all

As the global economy normalises after 18 months of perfect calm, a number of flash points are emerging:

  • Argentina has requested help from the IMF after a precipitous fall in its currency and facing an unsustainable fiscal position. This comes only 6 months after the country successfully sold 100 year bonds, which now trade below 90 cents in the dollar.
  • The Turkish Lira has depreciated almost 15% YTD ahead of snap elections in which President Erdogan is attempting to consolidate power and where the President has stymied the ability of the central bank to raise rates.
  • Italy faces an uncertain outlook, with the prospect of a populist coalition government that will only serve to amplify an already untenable fiscal position.

However, the fact that not every market is in perfect health, does not change our perception on the aggregate picture or our specific “top picks”. In Asia, China and India are outpacing expectations, in Africa the medium-term potential for Egypt and South Africa is improving and in Latin America much of the region is still enjoying favourable cyclical tailwinds.

 

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