Top 3 data/events
• Kenya – Policy rate expected to stay on hold until Q3
• Taiwan – TWD NEER weakness expected to aid export outlook
• United States – A moderate increase in December payrolls is likely
• Market focus
• December CPI is likely...
• Despite a likely setback to tourism, we expect Kenya’s economy to be largely resilient
• Even given weaker-than-expected headline GDP in Q2, many other sectors outperformed
• Fiscal revenue in Q1-FY14 was above the budget target
• Higher headli...
• The Fed’s decision to postpone tapering QE in September led to a relief rally in some markets. In others, the focus on more negative credit fundamentals remains. With tapering of QE still expected eventually, we look at the underlying trend in mor...
To paraphrase Mark Twain, the reports of the death of EM bond markets have been greatly exaggerated. Increased global allocations to local EM bond markets have been not cyclical but primarily structural in nature, reflecting these markets’ rising ec...
Most countries now aim to achieve ‘sustainable development’, not just maximum GDP growth. But what does this mean? How can it be measured? And how does it relate to the concept of human well-being and to ‘happiness economics’?
• We present a new St...
• 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...
• 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...
• This supersedes the version dated 20 June 2013. Changes Ghana FX weighting to Neutral.
• Three sources of vulnerability will add to short-term market volatility: the concentration of foreign holdings, correlation to UST and local-market liquidit...
• Fiscal policy is likely to be constrained in 2013 in a number of Sub-Saharan African sovereigns
• In some countries, debt levels have increased to worrying levels
• Reducing energy subsidies can alleviate the pressure on public finances
• Greater certainty post-election is required for markets to rally
• Economic recovery is evident from the high-frequency data
• Managing fiscal devolution post-election will be a key challenge
• Sub-Saharan Africa’s growth momentum continues to be robust. New resource discoveries, firm trends in credit growth underscoring domestic consumption, and increased infrastructure investment are all important drivers of the region’s growth trend.
Higher spending to drive improved growth outlook in 2013
• However, Kenya’s first elections since its political fallout in 2007-08 are a key risk
• Active liquidity sterilisation by the CBK, even as it cuts policy rate further, will target KES sta...
Top 3 data/events
• India – Government plans additional market borrowing in H2-FY13
• Kenya – The last of the outsized rate cuts
• Euro area – Greece in the spotlight again as parliament votes on austerity
• Market focus
• USD is likely to see...
• Q2-2012 growth rose only 3.3% y/y after growing 3.5% in Q1
• This is the weakest quarterly growth since Kenya’s post-election crisis in Q1-2008
• However, data is at odds with a number of higher-frequency indicators
• We are optimistic about a ...
• Despite IMF downgrades to global growth forecasts, real GDP in Sub-Saharan Africa should average around 5% in 2012. Africa continues to present a diverse picture: initially investor concerns centred on the impact of the slowdown in Europe; they no...
Local-currency emerging bond markets have seen ever greater levels of foreign demand as global investors flee from the ongoing European sovereign crisis and continue to allocate to fixed income securities. From less than USD 150bn in March 2009, for...
• Kenya announces a 20% increase in spending, while aiming to achieve some fiscal consolidation in FY13
• With external risks still significant, domestic borrowing may exceed budget projections
• In the very near term, local currency bond yields a...
• We close our trade recommendations on the 2Y Kenya and 3Y Uganda bonds at total profits of 20% and 13.77%, respectively
• We maintain a positive outlook on both bond markets but reduce risk near-term
• We expect a near-term retracement on tighte...
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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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