Research & Insight

Backed by landslide victories in two elections – Presidential in December ’07 and National Assembly in April ’08 – the so called MBnomics (initiated by the President, Lee Myung-Bak) was born. It seems to have been greatly supported by the Korean public at the beginning, but it is massively overwhelmed by the candle lit vigils these days, losing the opportunity of contribution to GDP growth.

The passing of the trust vote on 22nd July marks a watershed moment in Indian politics. The significance of it can be easily lost in the heaving of relief at the UPA coalition’s victory. The fact that the Sensex benchmark rallied by 6% the day after the UPA won its lease of life in Parliament, reflects the importance the stock market assigns to stable politics at the Centre.

This was the title of an email pinging into my inbox, inviting me to a hedge fund conference on Brazil, complete with the usual clichés of the country. I couldn’t resist the temptation to borrow it. To this observer, it feels like the wider market has only just discovered Brazil in the last two years. Long the poor relation of its more famous and faster growing BRIC* cousins; India and China, Brazil has finally emerged into the spotlight thanks, in part, to some good policy execution, and, in part, a big slice of luck with global commodity prices.

Commodity price rises and inflation, natural disasters and ongoing fallout from the credit and liquidity crunch around the world may have been the preoccupation for many over the last month, however, South Korea has witnessed seemingly extraordinary scenes of mass candle lit vigils in the centre of the country’s capital city, Seoul, over beef.

The previous six years in foreign exchange markets can clearly be defined as a prolonged period of trend dollar weakness. This has primarily occurred as a result of an overly large current account deficit and an excessively long period of low interest rates. However, recent economic and trade data out of the US, coupled with a more hawkish rhetoric from the Federal Reserve, suggest that this trend may be about to reverse.