Research & Insight

Thailand is suffering with the worst flooding in 50 years, which has already displaced over 2 million people, killing nearly 300. There is no sign of let up and the country is bracing itself for worse. While 30 of Thailand’s 77 provinces have been severely affected, Bangkok is now bracing itself, as floods from over-spilling dams in the north of the country are expected to affect the city in the coming days. 15% of farmland is affected and evacuation centres around the country are being set up. The government has started to bolster Bangkok’s flood defences.

Pension funds looking for reliable returns in a time of economic turbulence in Europe and North America should embrace emerging market debt, says the head of Rexiter asset management.

South Africans don’t need much of an excuse for a party and as next January marks the one hundredth anniversary of the founding of the ruling African National Congress (ANC), the Capes’ vineyards are certain to be doing great business come 2012. However, although it is now seventeen years since Mandela’s historic election victory in 1994, not all South Africans will be drinking hard to celebrate. Over half of the country’s youth remain unemployed, their futures bleak, and there is a growing sense that black empowerment is an ideology now abused to help the privileged few rather than the impoverished many.

Argentina’s recent primary elections held on August 14th saw President Cristina Fernández de Kirchner garner just over 50% of the votes cast. This vote was a first for the country after election reforms passed last year mandated that candidates for the Executive and Legislative branches be selected through primaries. However, with each party putting forth a single candidate and voters not restricted across party lines, the process was in essence a federally mandated poll. In this sense it should give a reasonably good indication of what to expect in October’s elections. With the President easily surpassing the 45% level needed to avoid a run-off, in our view we expect government policy to be basically more of the same going into 2012. From a markets standpoint, this means that Argentina becomes increasingly vulnerable to weak external conditions and returns in peso denominated sovereign bonds are likely to be muted.

Local currency emerging market debt continues to be in demand internationally with flows strong and impressive performance. Asia led the way in July with strong returns across all four benchmark countries. Foreign exchange appreciation continues to be the dominant driver of these returns.