In This Week’s Issue…
by Alexander Kalis Managing Partner & Head of Investments at Milltrust International

In Chinayoung shoppers have breathed new life into the luxury market. Millennial shoppers pushed the Chinese market up to 142 billion yuan ($22.07 billion) in sales last year, about 20 percent higher than the year before. It is by far the steepest jump in over half a decade of sluggish growth. Luxury goods purchased in China make up 8 percent of the global total, while Chinese shoppers – who make three-quarters of their luxury purchases overseas – drive 32 percent of sales worldwide.

The move to luxury goods in China has been felt across sectors, not least in automobiles. At the luxury end of the sector, the Germans are the dominant force. More than 70 per cent of the 2.2m premium vehicles sold in China last year were German, led by Audi, BMW and Mercedes-Benz.

In India, Prime Minister Narendra Modi has delivered the election-year budget many expected. With national polls looming next year — and possibly as early as late 2018 — Finance Minister Arun Jaitley has rolled out a budget designed to help distressed farmers and rural areas while boosting growth, jobs and private investment. Here are the Winners and Losers of the 2018 Budget.

In South Korea, rather than follow China’s lead and take the drastic step of closing down domestic exchanges, the finance minister clarified that the country did not intend to ban cryptocurrency trading, after the government took measures to increase scrutiny of cryptocurrency trading in order to calm what it considers an overheated market.

In Southeast Asia, a rally in Thailand’s stocks to a record may trip up on a comparatively moderate pace of economic expansion that threatens to cool foreign-investor interest, according to the nation’s second-biggest private money manager.This year’s domestic economic growth forecast of about 4 percent is slower than many other developing markets in Asia. The outlook has probably dented international investors’ appetite for Thai equities relative to other Asian countries.

In Latin AmericaMexico’s economy grew by 1 per cent in the fourth quarter compared with the third quarter, and 1.7 per cent versus the prior year period, for an overall seasonally-adjusted 2017 growth rate of 2.3 per cent according to preliminary figures from the state statistics office. Construction activity in the wake of last September’s twin, devastating earthquakes, was seen helping lift the economy in the final quarter. Primary activity rose 4 per cent year-on-year in the quarter. The real question now is whether NAFTA will survive in 2018.

In the Middle East, the Kingdom of Saudi Arabia is currently undergoing a series of well-publicised and significant reforms that will transform the country over the coming years. Vision 2030, which was first unveiled in 2016, has several major goals, including decreasing the country’s reliance on fossil fuels for economic growth and increasing the private sector’s participation in the economy. The kingdom is also in the process of driving foreign direct investment and Google’s parent company Alphabet has recently indicated that it is exploring a deal with Saudi Arabia’s state-owned oil company Aramco to build  a “tech hub” in the Middle East. Alphabet would build data centers in the region as competition from other companies like Amazon heats up.

In South Africa, Cape Town, a city of 4 million people, is about to run out of fresh water. After three years of persistent drought, the government is warning that “Day Zero” — when they will be forced to turn off the faucets — will be April 16, 2018. That’s when reservoirs and water sources will hit 13.5% capacity, at which point the city will move most residents to a strict bucket- and jug-based water rationing system. The World Wildlife Fund estimates that by 2025, two thirds of the world will be dealing with water shortages.

Finally, in Russia, assets showed little reaction to Tuesday’s release of a U.S. report naming major Russian businessmen among a list of people close to President Vladimir Putin. Stocks and the rouble were blunted by the United States saying on Monday that it would not immediately impose new sanctions on Russia.


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