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Having come out of a five-year bear market, Mike Ingram, from BGC Partners, says this has been a turning point for emerging markets as a whole. But where now as we move into 2017?
He believes there are hopes that a Trump presidency will help to ‘turbocharge’ those markets. But he cautions that it is still unclear as to just how this will play out in detail. Mike is concerned that Trump has laid his cards out on the table for others to see and that he is pro-growth, pro-America, it is still not completely obvious as to how other countries can participate in this reflationary trade. Mike says the ‘glass may not be entirely half-full’.
One of the problems Mike highlights is that the re-balancing of the Chinese economy has regressed over the last year as the authorities have been side-tracked because of the rigid requirement to hit economic data. He also says that Chinese debt is still a big concern for global markets.
On Russia, Mike says that 2017 could be the year that Russia comes out of an 18-month recession. He also discusses the changing geopolitical relations between the US and Russia and things are now seemingly going in the Russia’s direction.
Another ‘commodity story’ is Brazil. Mike says there is more internal demand than in other similar emerging market economies that can help the Brazilian economy emerge from recession. Earnings estimates, he says, have also been bumped up in the last few months, but also reminds us that Petrobras, the semi-public Brazilian multinational corporation in the petroleum industry, headquartered in the capital, Rio, is a major contributor to Brazil’s economy.
Finally for Mexico, with the Trump wall and the potential collapse of the North American Free Trade Agreement (NAFTA), he says it is already obvious that Mexico will have issues.