• The summer tourism season was even worse than expected
• But banking deposits have shown renewed resilience, strengthening a pillar of the economy
• Investors seem to remain sanguine about Lebanon bonds
• We revise our GDP growth forecast down on oil output, which is constrained by the operating environment
• The security situation has worsened substantially in recent months
• Oil potential remains vast but thwarted for now
• The non-hydrocarbon sector continues to show subpar metrics
• Moody’s has downgraded Bahrain again
• Refinery output capacity should rise by 38%
• Hydrocarbon-based economies are using their fiscal strength to drive near-term growth and diversify their economies to reduce long-term risks. Oil importers are constrained by high domestic subsidy bills and weak investment; this is hampering econ...
• Strong growth momentum to remain
• Higher twin deficits on the back of higher investment
• Political uncertainty has increased...
• SBP raises policy rates by 50bps at its 13 September meeting; timing surprises the market
• Central bank highlights inflation’s sharp acceleration and the weak balance of payment position
• SBP raises headline CPI projection for FY14 to 11-12%...
• Growth should remain strong in 2013, boosted by high government spending and low interest rates
• An expansionary fiscal policy will continue to contribute to a widening fiscal deficit, estimated at 6.4% in 2013
• Deterioration in South African ...
• Local fundamentals are likely to prevail now that some element of an early tapering of QE is priced in
• We remain Overweight FX and duration on Nigeria on supportive fundamentals and valuations
• We also maintain an Overweight duration stance o...
• GDP growth in 2013 is likely to remain muted at around 3.5%, as the economy remains susceptible weak euro-area growth
• Weakness in the tourism and manufacturing sectors is contributing to rising unemployment
• Following a surprise 25bps cut to...
• Growth momentum in Sub-Saharan Africa remains largely positive, despite uncertainty related to Fed tapering expectations and slowing trend growth in China
• African economies will not be impacted uniformly by a reduction in QE. More liquid marke...
• Prospects in the Sub-Saharan African region remain largely positive, despite uncertainty related to market expectations of Fed tapering, and a slowdown in China’s growth trend to more sustainable levels.
• South Africa is more susceptible to glob...
• Stable FX reserves offset the impact of Moody’s sovereign outlook revision on Sri Lankan markets
• Steady growth and lower inflation underpin our constructive outlook on Sri Lanka
• Inflation is likely to pick up in Q4, but the absence of furthe...
• The PMLN government’s first budget targets 4.4% growth and a 35% increase in investment spending
• The FY14 deficit target is 6.3% of GDP, down from 8.8% in FY13, on higher taxes and subsidy cuts
• The budget is in line with IMF requirements for...
• BoG to announce measures to support the GHS around the time of the MPC decision tomorrow
• Buy 3Y bonds at 18.50%, target: 17%, stop-loss: 19.25%
• FX carry is attractive: with spot USD-GHS at 1.99 we maintain our 6M target of 2.03 (6M forward:...
• Despite a modest planned increase in 2013 spending, budget oil-revenue assumptions are still optimistic
• Augmentation of revenue from Nigeria’s Excess Crude Account is still possible
• Calls for greater monetary easing, given near-term growth c...
• Gradual recovery in real GDP looks likely in 2013
• Inflation concerns mean the policy rate should remain on hold until 2014
• Oil will provide a long-term boost to growth, but production is still several years away
• Despite tightening measures, pressure on the currency has persisted
• Planned Bank of Zambia Act to allow the central bank to monitor and better regulate current account transactions
• Exporters may be required to remit earnings back to Zambia
Our sensitivity indicator of yield vs. positioning is falling; EM/DM yield spreads to widen near-term
• Within EM, low-yielding bonds to outperform high-yielding as the sensitivity of positioning to yields falls
• Investors should keep exposure to...
• Ghana announces substantial cuts to domestic fuel subsidies
• The move follows a 2012 fiscal deficit of 12.1% and Fitch’s revision of Ghana’s rating outlook to negative
• Further fiscal reforms are needed to reassure investors
• We update our U...
SC FIRST is based on novel, deep, on-the-ground insight into foreign investor activity in EM bonds
• Our dataset of foreign holdings of GBI-EMGD local debt is USD 484bn, 4x the size of EPFR data
• We quantify three different investor types and us...
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The world economy is in transition. Global growth rates are picking up, but transition means elevated risks and volatility.
In terms of global implications, all eyes will be on the US and China, with the US normalising monetary policy and China rebalancing its economy.
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