Political risk may seemingly be fading in Europe, but it has reappeared recently in Brazil, as President Temer has been implicated in yet another corruption-related scandal. Brazilian assets have performed strongly over the past year following Dilma Rousseff’s impeachment and her replacement by a reformist administration led by Temer, and have reacted violently to the latest news. In our first article, Gilberto Kfouri and Victor Alves analyse the latest developments, and their medium-to-longer-term view of the implications for Brazilian fixed income and currencies.
The interplay between Chinese capital outflows and the exchange rate stance of the People’s Bank of China (PBOC) was a strong source of instability for Chinese and global markets in 2015 and early 2016. More recently, capital outflows have slowed, and the downward pressure on the remnimbi has eased. In the second of our articles this week, Chi Lo takes a closer look at the PBOC’s dual approach to managing the renminbi against the US dollar and against a trade-weighted basket simultaneously, and draws a non-consensus conclusion about the future course of the remnimbi against the dollar.
As the first round of the French parliamentary elections approaches, and European equity markets remain close to recent hikes, Daniel Morris concludes this edition of The Intelligence Report by examining the positive fundamental case for European equities.Download to read more