Global large-and-mid capitalisation stocks have climbed to within easy striking distance of setting a new all-time high for the first time in almost two years, led by a strong performance by US equities.
The MSCI all-world index, which tracks companies in 46 countries that account for 85 per cent of the investable equities market, closed on Monday at 441.14, just 0.35 per cent away from the all-time high it struck in May 2015.
The gauge has climbed by 23.5 per cent over the past 12 months, partly reflecting a sharp rebound from a fall at the start of last year.
Equity bourses around the world have been lifted by a brightening outlook for the world economy, along with a recovery in the price of oil.
World Bank economists reckon global growth will accelerate from 2.3 per cent in 2016, to 2.7 per cent this year, and 2.9 per cent the next year. The optimism has come as central banks in Europe and Asia have loosened monetary policy in a bid to spur faster growth.
In the US, the Federal Reserve has pledged to only “gradually” tighten policy. Some economists have also marked-up their estimates for the rate of expansion for the world’s biggest developed economy on expectations that Donald Trump and a Republican Congress will roll-out business-friendly policies.
India ranked 97th out of 118 countries on the International Food Policy Research Institute’s (IFPRI) Global Hunger Index (GHI) in 2016, behind Nepal, Sri Lanka, Bangladesh, among others, but ahead of Pakistan and three other Asian countries. It was positioned at 80 out of 104 countries the previous year.
While India has improved its score on various parameters over the past few years, two out of five children below five years of age are stunted in India. Stunting measures chronic malnutrition and affected children’s height would be considerably below the average for their age.
Besides, the country was still rated with ‘serious’ hunger levels in the 2016 Index.
The country had only the fifth highest rank in the whole of Asia, better than only North Korea (98), Pakistan (107), Timor-Leste (110) and Afghanistan (111).
Nepal (72), Sri Lanka (84), and Bangladesh (90) had higher ranks among 96 countries than India’s. Also, India had the lowest rank among BRICS nations, with Brazil in the top 16, Russia at 24, China at 29 and South Africa at 51.
If hunger continues to decline at the same rate it has been falling since 1992, around 45 countries, including India, Pakistan, Haiti, Yemen, and Afghanistan will still have ‘moderate’ to ‘alarming’ hunger scores in year 2030, far short of the United Nations’ goal to end hunger by that year.
Tensions between India and Pakistan are rising. The Philippine government ordered the suspension of three quarters of the nation’s mines. Czech central bank sounds more confident of the cap exit. Poland’s Finance Minister Szalamacha was sacked. Moody’s downgraded Turkey one notch to Ba1 with a stable outlook. The Brazilian central bank’s quarterly inflation report set the table for the easing cycle to start.
In the EM equity space as measured by MSCI, Colombia (+2.1%), Mexico (+1.0%), and Singapore (+0.5%) have outperformed this week, while Turkey (-4.2%), China (-2.5%), and Poland (-2.2%) have underperformed. To put this in better context, MSCI EM fell -1.5% this week while MSCI DM fell -0.6%.
In the EM local currency bond space, Brazil (10-year yield -12 bp), Mexico (-12 bp), and Russia (-9 bp) have outperformed this week, while Turkey (10-year yield +20 bp), Indonesia (+19 bp), and Ukraine (+19 bp) have underperformed. To put this in better context, the 10-year UST yield fell 6 bp this week to 1.56%.
In the EM FX space, MXN (+1.8% vs. USD), RUB (+1.4% vs. USD), and COP (+1.4% vs. USD) have outperformed this week, while PEN (-1.4% vs. USD), HUF (-1.2% vs. EUR), and TRY (-1.2% vs. USD) have underperformed.
The joint share of the BRICS emerging economies in the International Monetary Fund’s capital has almost reached 15 percent, Russian President Vladimir Putin said Sunday at an informal meeting of BRICS leaders on the sidelines of the G20 summit in Hangzhou, China.
“The BRICS countries saw its joint share in the Fund’s capital to increase to 14.89 percent, a step away from 15-percent blocking threshold. Without a doubt, we have to move forward to carry out an IMF reform,” Putin said. BRICS is an association of five developing economies (Brazil, Russia, India, China, South Africa), which comprises over one third of the world’s population. The five nations have a combined nominal GDP equivalent to approximately 20 percent of gross world product. BRICS Contingent Reserve Arrangement, New Development Bank Should Work on Full Scale The work of BRICS Contingent Reserve Arrangement and New Development Bank should be brought to a full-fledged scale, Putin. “It is necessary to bring to a full-scale work the Contingent Reserve Arrangement and New Development Bank established by BRICS,” Putin said at the informal meeting of the leaders of BRICS member states.
The Russian leader pointed out the need to adopt the bank’s strategy and ” to provide loans in national currencies,” as well as to “move on to the financing of specific projects.”
Brazil, Russia, India, China and South Africa signed an agreement on setting up the BRICS Bank at the summit in Fortaleza, Brazil in July 2014.
The bank will become a major development institution with a statutory capital of $100 billion. BRICS countries have also agreed on the BRICS Contingent Reserve Arrangement (CRA), to which China contributed $41 billion, Brazil — $18 billion, Russia – $18 billion, India – $18 billion, South Africa – $5 billion. The reserve pool is to serve as a monetary backup in times of economic slowdown.
Brazil’s Supreme Court President Ricardo Lewandowski had held consultations with senators and was ready to schedule the special session for the vote on 11 a.m. local time (14:00 GMT), the Globo news portal reported on Tuesday.
The portal added that if 54 senators voted for the impeachment, Rousseff would be removed from office, otherwise the impeachment would be terminated and she would resume the presidency. In May, the upper house of the Brazilian parliament voted 55-22 to start impeachment proceedings against Rousseff after she was accused of concealing the country’s budget deficit ahead of the 2014 election. Rousseff regards the impeachment proceedings as an illegal coup attempt. Rousseff has been suspended from office for 180 days. Vice President Michel Temer has being fulfilling the functions of the presidency during that period.
China unveiled a second equity link that will allow foreign investors to buy local stocks with fewer restrictions.
Saudi Arabia will allow qualified foreign investors to subscribe to local IPOs starting this January.
South Africa’s two main opposition parties agreed to informally band together in local governments.
The Brazilian central bank decreased the daily intervention amount to 10,000 reverse swap contracts from 15,000 before, just a week after it increased that amount from 10,000.
In the EM equity space as measured by MSCI, Qatar (+4.0%), Colombia (+3.0%), and China (+1.5%) have outperformed this week, while Czech Republic (-3.9%), Poland (-3.3%), and Chile (-2.6%) have underperformed. To put this in better context, MSCI EM fell -0.1% this week while MSCI DM fell -0.5%.
In the EM local currency bond space, Colombia (10-year yield -19 bp), Russia (-8 bp), and Taiwan (-4 bp) have outperformed this week, while Ukraine (10-year yield +27), Turkey (+22 bp), and the Philippines (+9 bp) have underperformed. To put this in better context, the 10-year UST yield rose 5 bp this week to 1.56%.
In the EM FX space, COP (+1.8% vs. USD), RUB (+1.4% vs. USD), and ILS (+1.1% vs. USD) have outperformed this week, while ARS (-1.9% vs. USD), CLP (-1.8% vs. USD), and KRW (-1.3% vs. USD) have underperformed.
The World Bank is set to appoint Paul Romer, a longtime advocate of the economic power of human capital and student of urbanisation, as its new chief economist, bringing arguably the highest-profile name to the role since Nobel winner Joseph Stiglitz.
Mr Romer, a US economist who teaches at New York University, is expected to replace Kaushik Basu later this year. A spokesman for the bank would not confirm Mr Romer’s appointment but others within the institution did. His name is expected to be presented to the World Bank’s board as soon as Monday and announced publicly later in the week.
The move would put an important and occasionally provocative voice in economics in charge of the bank’s research department.
His 1990 paper arguing the case for “endogenous growth” — the theory that knowledge and innovation can spur growth — is considered one of the most influential papers in economics of the past 30 years.
“It’s an impressive choice,” said Scott Morris, a former US Treasury official who follows the World Bank for the Centre for Global Development. “It’s more in the [Larry] Summers and Stiglitz mold of picking an American superstar economist.”
Brazil’s economy contracted 5.4 per cent in the first quarter from a year earlier as the country’s deep political crisis paralyses what was once one of the world’s fastest-growing emerging markets.
Data on Wednesday showed Brazil’s gross domestic product contracted for the fifth straight quarter in early 2016, shrinking 0.3 per cent from the last quarter of 2015 – further evidence that the country is heading for its worst recession on record.
However, the figures were better than analysts had expected, with a Reuters poll earlier forecasting a 6 per cent year-on-year contraction and a 0.8 per cent decline from the previous quarter.
Following Dilma Rousseff’s suspension from office last month pending an impeachment trial, the government of interim president Michel Temer has struggled to put Latin America’s biggest economy back on track.
In one of his boldest moves yet, Mr Temer last week proposed a constitutional amendment to freeze future public expenses to tackle the country’s fiscal crisis and win back the trust of the world’s investors.
However, the country’s vast corruption investigation into bribery and kickbacks at oil company Petrobras has threatened to destabilise his government – over the past ten days, two of Mr Temer’s ministers have stepped down over the scandal.
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