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By Eric Lascelles of RBC Global Asset Management

Globalisation was an unstoppable force over the past quarter century, marked by trade flows that grew at almost twice the clip of the global economy and by surging international capital flows, unleashing a torrent of demand and productive capacity. Emerging markets basked in outsized economic growth and rising standards of living. The developed world benefited from low prices, greater selection and cheap borrowing costs.

Since 2011, however, world trade has suddenly found itself on a much dimmer trajectory, merely matching the rate of global growth. Relative to the pre-2011 trajectory, exports have fallen a whopping $1.4tn behind schedule. Continue reading »

By Timothy Ash of Standard Bank

The crisis in Ukraine continues to go from one worst case scenario to the next with little sign of any near term prospect of compromise or resolution.

High hopes were set on Wednesday’s Minsk summit but little was achieved in effect – beyond a photo op for Vladimir Putin, Russia’s president, who spun a yarn that he is really, truly interested in peace, and in any event that Russia is in fact not a party to the current conflict. Continue reading »

By Stefan Jajecznyk and Taras Kuzio

As fighting in the Donetsk and Luhansk regions intensifies, the first foreign member of the Ukrainian military has become a casualty of Russia’s proxy war. Codenamed ‘Franko’, Mark Paslawsky who grew up in the Ukrainian diaspora in New Jersey and was a West Point-trained officer in the US Rangers, gave up his US citizenship for a Ukrainian passport and the chance to serve in the Donbas volunteer battalion, one of more than 20 in Ukraine’s newly formed National Guard.

Paslawsky (pictured above) was wounded by shrapnel on August 18 during a firefight with separatists and Russian paratroopers in the outskirts of the regional capital of Luhansk. With no air ambulance available he could not be saved by medics. He was buried this week. Continue reading »

By Ben Aris of bne

Presidents Petro Poroshenko of Ukraine and Vladimir Putin of Russia are to meet in Minsk today for the first time since fighting broke out in eastern Ukraine. Expectations for a peace deal are low. But what can each side put on the table to try to end a conflict that is killing thousands and smashing to pieces the most productive part of the country? Continue reading »

By Márcio Garcia of PUC-Rio

Last year’s taper tantrum caused massive turbulence in global markets. Risky assets suffered greatly and many emerging markets currencies depreciated heavily, including the Brazilian real.

In response, the Brazilian central bank (BCB) decided to intervene in the foreign exchange markets. After an ad hoc beginning, from August 2013 the BCB announced a programme of sales of $2bn of exchange rate swaps every week, plus a weekly auction of $1bn in short term dollar credit lines to the banks. Continue reading »

By Timothy Ash of Standard Bank

There are so many moving parts involved in Ukraine that it is hard to gauge the situation with any certainty. But without doubt the most interesting event of the past 24 hours was the Russian military convoy crossing the border, witnessed and photographed by western and Russian media outlets. More remarkable has been the muted reaction from the west and indeed from the western media. If this had happened four or five weeks ago, the White House PR machine would have gone into overdrive and warned of new sanctions unless Russia “de-escalated”. Thus far we have seen next to nothing. Continue reading »

By George Iwanicki of JP Morgan Asset Management

In recent years, EMs have struggled relative to DMs because of the widening gap in economic performance. The chart below shows economists’ consensus forecasts for gross domestic product growth of EMs versus DMs over the next 12 months.

Economic growth in both EMs and DMs sharply improved after the financial crisis in 2008. In recent years, however, EM growth has decelerated while growth expectations for DMs have improved. This decoupling between EMs and DMs is the primary culprit behind the multi-year slowdown in EM profits, the decline in relative market performance and, within EM equities, the outperformance of growth stocks over value. Continue reading »

By Paul Hodges of International eChem

China’s July lending level of just Rmb 385bn ($62.6bn) has surprised financial markets, which were expecting an increase in stimulus. But bigger surprises may lie ahead.

The strong link between lending and passenger car sales suggests we may be about to see major changes in the world’s largest car market.

The key to forecasting China’s auto demand since 2008 has been the level of bank lending, as the chart below shows. Continue reading »

By Conchita Sarnoff of ARVT

On an ordinary Monday in May, Ellen Gonzales woke up to find a handwritten note nailed to the front door of her home in La Palma, El Salvador. Her 11-year-old son Bryan, it said, had been tocado: “selected” as a recruit for La Mara, one of the most violent of the Hispanic organised crime gangs operating across Central America and the US. She decided it was time to run. Continue reading »

By Hurley Doddy of Emerging Capital Partners

This week, at the US – Africa Leaders Summit in Washington DC, the Obama administration will be discussing ways of stimulating growth, unlocking opportunities and creating an enabling environment for the next generation with African heads of state and business leaders. The summit, which builds on President Obama’s trip to Africa in the summer of 2013, is intended to advance the administration’s focus on trade and investment in Africa. Continue reading »

By Andrew Foxall of the Henry Jackson Society

The “stage three” sanctions announced by the US and the European Union against Russia last week are designed to bring about change in President Vladimir Putin’s behaviour by targeting Russia where it is most vulnerable – its economy.

Earlier rounds of sanctions – which primarily targeted government officials and businesses owned by those officials – were not taken seriously by their targets. Being sanctioned was seen a “badge of honour” by senior Russians. Continue reading »

By Mark Stefanini of Mayer Brown

While global markets watched the clock tick down on Argentina’s default this week, the holdout creditors’ camp would have already started considering redoubling their efforts to extract payment from Argentina. The potential for NML to target Argentina’s overseas assets could provide the next twist in the tale – and set a precedent for exposing previously hidden transactions and assets in other emerging markets and worldwide. Continue reading »

By Jonathan Fenby of Trusted Sources

Tuesday’s announcement that former Politburo Standing Committee member Zhou Yongkang is to be investigated for corruption shows just how important the drive launched by Xi Jinping at the end of 2012 has become, with implications that stretch beyond the political power play into the economy. It is an important weapon in the simultaneous and wider reform programme with potential positive impact on the huge state sector and the investibility of its big listed companies. Continue reading »

By Dalibor Rohac of the Cato Institute

One can only hope that Vladimir Putin’s war against Ukraine, which has claimed, among others, the lives of the passengers of flight MH17, will come to an early end. But is it possible that the conflict, for all the suffering and senseless destruction it has brought, could have a silver lining?

The past 20 years, during which many Ukrainians thought of their country as a bridge between the West and the East, without any obvious enemies, were years of complacency and failed economic policies, which ultimately resulted in the capture of the government by special interests. Continue reading »

By Ben Simpfendorfer of Silk Road Associates

The Yuecheng in Beijing’s southern suburbs is a pleasant looking senior living home. Its main living room is full of books, potted plants, and mahjong tables. Its bedrooms are bright and well equipped and little different from the rooms that many might be used to seeing in Europe or the US.

Indeed, to the casual observer, the Yuecheng appears to be a pin-up for the commercial opportunities of selling to China’s growing ranks of elderly people. But that’s why it’s also misleading. Continue reading »