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It’s hard to know where to start with the events of last week. In my previous newsletter I contemplated the possibility of a Trump presidency but I share the surprise of most that it actually happened. So what now?
As I write, the US stock market is hitting record highs and emerging market currencies are being heavily hit. Conventional wisdom is that emerging markets
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are going to suffer as a result of President-elect Trump’s stated intention to renegotiate trade agreements and impose import tariffs. There is also the worry that US inflation will be stimulated by growth in fiscal spending that Trump has promised, leading to increases in interest rates – never a good thing for emerging market investment.
But the thing to remember in the feverish aftermath of a political upset like this is that policy shifts like these are both difficult to implement and may take a long time to achieve. Much of what Mr Trump has spoken about is likely to be watered down, even with a compliant house and senate (which he may not in fact be able to rely on). We have to hope that even a President Trump recognises the benefits that international trade bestow on the US population and that his protectionist agenda will not be enacted in full.
Ultimately, no one really knows how all this will play out. Conventional wisdom no longer seems to apply. I, for one, am optimistic that emerging markets retain the foundations and resources for growth in the long-term. Can we confidently say the same about developed countries?
Guy Dunn Chief Executive Officer.
P.S. Here is some reaction from emerging markets to the US election that I came across on the EMIS platform last week.
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MEXICO FEARS TOUGH TIMES WITH TRUMP From avocado orchards to border factories, Mexican exporters who have prospered under two decades of NAFTA face the prospect of an abrupt end to the boom if U.S. President-elect Donald Trump carries out his threats to ditch the free trade pact.
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The infographic details the top emerging markets M&A deals in October 2016, ranked by deal value.
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Below are the most read articles in the past week on EMIS Perspectives, our daily blog of emerging market news and insights.
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CHINA REACTS TO US ELECTION RESULTS WITH CAUTION
China treated news of a Donald Trump victory with caution, reported PTI News, after keenly following how the election season unfolded with both candidates showing a tough stance against Beijing.
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FDI TO NIGERIA DROP 53% TO $341 MN IN Q3 Y/Y
Foreign direct investments (FDI) to Nigeria fell 52.54% on the year to $340.6 million in the third quarter of this year, Vanguard-Nigeria reported on Tuesday citing data by the national bureau of statistics, NBS.
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FRENCH TOTAL IN $4.8 BN GAS DEAL IN IRAN
French oil and gas company Total has signed a preliminary deal worth $4.8 billion for development of a natural gas project in Iran together with the National Iranian Oil Company (NIOC) and China National Petroleum Corp (CNCP).
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ABOUT EMIS EMIS operates in and reports on countries where high reward goes hand-in-hand with high risk. We bring you time-sensitive, hard-to-get, relevant news, research and analytical data, peer comparisons and more for over 120 emerging markets.
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