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19 June 2017
FROM THE CEO OF EMIS
Conventional wisdom is that any rise in US interest rates spells bad news for emerging markets. The US Federal Reserve approved the second rate hike of 2017 last week but, instead of the doom-mongering that would normally ensue, most of the commentary about what this means for developing countries has been unusually sanguine.
There are a few reasons for this subdued reaction. Firstly, the Fed appears to be taking a gradual approach to interest rates so that rises are well signposted and their impact is lessened.
Secondly, most emerging markets are now in a better position to withstand the impact of any tightening of US monetary policy having reduced the credit gap in their economies. Finally, there appears to be a growing realisation that the fortunes of emerging markets are not as closely tied to US interest rates as had been assumed.

The latest rise comes at a time of rising positivity around developing countries that is supported by strong growth data coming out central and eastern Europe. The IMF also raised its growth forecasts for China last week – the second time it has done so this year. At EMIS, we have a natural optimism about the long-term prospects of markets so it is hugely encouraging to see how resilient most of these countries have become to events that might once have weighed them down.


Guy Dunn

P.S. Here are a few articles on the impact of the US rate hike from the EMIS platform last week.
GOLDMAN SACHS: EMERGING MARKETS ARE PROTECTING THEMSELVES FROM THE BLOW OF FED RATE HIKES
Emerging markets are doing their own little bit to cushion the blow of Federal Reserve interest-rate hikes, with countries such as Brazil already putting the brakes on borrowing, according to Goldman Sachs Group Inc.
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FED'S MOVE FAILED TO HAVE ANY MAJOR EFFECTS ON CHINA'S CAPITAL MARKET
The Fed's move, announced on Wednesday, failed to have any major effects on China's capital market, as shown in the performance of its stock market, interbank market and currency exchange market.
   Read more   
FED´S POLICY RATE SUGGESTS NO THREAT TO FII FLOWS TO INDIA
As expected the Federal Reserve raised the policy rate by 25 bps post its two-day Fed meeting. While Fed projections signal a further rate increase this year, markets aren't quite pricing this in.
   Read more   
INFOGRAPHIC OF THE WEEK
CHINA FOOD AND BEVERAGE SECTOR 2016/2017

Food and beverage manufacturing is one of the most important sectors of China’s economy, as it provides sustenance to almost 20% of the world’s population. The sector also provides an impetus for the development of related industries such as agriculture, transportation, machinery and vehicle manufacturing, and retail. 




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CEIC DATA POINT OF THE WEEK
CEIC Data is a sister company of EMIS and part of the Euromoney Data Division
INDIAN AUTOMOBILE SALES GREW IN MAY 2017

Indian Automobile sales grew with 9.6% in May 2017 which marked the fourth consecutive month of positive growth. The booming sector was affected by the demonetization of November 2016 and experienced an annual decrease for the period November 2016 – January 2017 (being hit particularly hard in December -16%).

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WEEKLY NEWS SUMMARY
Below are the most read articles in the past week on EMIS Perspectives, our daily blog of emerging market news and insights.
    ASIA    
MCKINSEY: CHINESE LUXURY SPENDING TO JUMP TO 1 TRILLION YUAN BY 2025
China luxury market will be doubled to 1 trillion yuan (US$147 billion) by 2025, Shanghai Daily has noted citing a recent McKinsey report.

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INVESTORS SEE PHILIPPINES AS ONE OF THE TOP DESTINATIONS FOR FDI
A United Nations report has cited the Philippines as one of the world’s top destinations for foreign direct investments (FDI). 

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VIETNAM CAR SALES EDGE UP BY 6% IN MAY
Sales of automobiles in Vietnam has reached 23,232 units in May, a 6 percent increase from the previous month, Intellasia reported citing data from Vietnam Automobile Manufacturers’ Association.
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              LATIN AMERICA              
NORWEGIAN STATOIL WANTS TO TRIPLE BRAZILIAN PRODUCTION
Norwegian oil and gas company Statoil wants to more than triple its Brazilian production, Petroleum Bazaar – PetroMag reported on Tuesday citing Anders Opedal, Statoil's head of Brazilian operations as saying to Reuters.  

   Read more   
PUERTO RICO VOTES IN FAVOUR OF BEING 51ST USA STATE
Puerto Rico has voted overwhelmingly in favour of becoming USA’s 51st state, Daily Mirror reported citing Reuters. According to a government website for the non-binging referendum, 97% of the voters supported statehood. 

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TOYOTA REAFFIRMS $ 3.94BN INVESTMENT IN MEXICAN STATE
Japanese vehicle manufacturer Toyota has reaffirmed its investment plan for the Mexican state of Guanajuato. The company will invest approximately USD 3.94bn in a new factory and it will generate over 5.000 jobs in the state between 2019 and 2020.

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     EMERGING EUROPE     
FIRST IKEA STORE IN SERBIA TO OPEN IN AUG
Swedish home furniture retailer IKEA will open its first store in Serbia on August 10, BBJ - Regional Today reported on Tuesday citing the chief executive of the company for South East Europe (SEE), Stefan Vanoverbeke as saying. 
 
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POLAND, DENMARK TO SIGN MEMORANDUM ON BALTIC PIPE GAS LINK
Poland and Denmark will sign today (Jun 9th) in Copenhagen a memorandum of understating on the key Baltic Pipe gas link, Polish PM Beata Szydlo said as quoted by PAP.

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GERMAN TIRES PRODUCER CONTINENTAL TO CREATE FURTHER 1,500 JOBS IN ROMANIA THIS YEAR
German tires producer Continental will create further 1,500 jobs at its seven production units and four research and development (R&D) centers in Romania this year, business daily Ziarul Financiar reported on Monday.

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          MIDDLE EAST & AFRICA          
IMF MAY CLOSE USD 1.3BN THREE-YEAR PROGRAMME WITH ZAMBIA
The International Monetary Fund (IMF) may lend Zambia USD 1.3bn in the next three years in budget support funding, Business and Financial Times Ghana said citing IMF Chief of mission to Zambia Tchidi Tsikata.

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GHANA MULLS BUYING SHARES OF BIG INTL FOOD COMPANIES TO BOOST REVENUE
The government of Ghana mulls buying shares of big international cocoa processors, to boost its revenue and benefit from the huge demand for this key ingredient for production of chocolate and drinks, Ghana Web reported on Wednesday. 

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QATAR TO BUY FROM US MILITARY AIRCRAFT IN $12BN DEAL
Qatar to buy from the US F-15 fighters under a $12 billion deal, AFP reported on Thursday. The US Secretary of Defense Jim Mattis and his Qatari counterpart Khalid al-Attiyah signed a letter of agreement for this deal on Wednesday. 

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