In This Week’s Issue…

by Alexander Kalis | Managing Partner & Head of Investments at Milltrust International 

China A Shares, Modi Election Boost, Indonesia under Pressure, Brazil on Fertile Ground, and Argentina Interest Rates Hit 40%.

China’s Stock Market is About to Go Global like Never Before.

On June 1, MSCI Inc. will add distiller Kweichow Moutai Co., brokerage Guosen Securities Co. and more than 200 other locally listed Chinese companies to benchmark equity gauges that guide the investment of $12 trillion. The New York-based index compiler will publish its final selection of so-called A shares on Monday,putting many of them on the buy lists of international retirement plans, endowments and exchange-traded funds for the first time.

Modi Boost

Indian Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) has received a boost in a major state election, though political uncertainty over the outcome roiled financial markets.

The BJP has won the largest number of seats in an election in the southern Indian state of Karnataka, more than doubling the amount it held previously. The vote, which was held on May 12, is viewed as a key indicator ahead of 2019’s general election.

Indonesia Under Pressure

The specter of financial market instability could force Indonesia’s central bank to raise interest rates later on Thursday even though the economy needs anything but monetary tightening.

Investors Too Stressed About Brazil

On balance, investors are much more pessimistic about Brazil due to pending elections this October than they are optimistic. The scales have clearly tipped in favor of a negative outcome, with a non-reformer taking the presidency.

Over the last three months, Brazil’s stock market has been getting beat by the benchmark emerging markets index. And it is also losing to Mexico, a country facing its own election on July 1. Pessimism makes Brazil cheap, and that means it is becoming fertile ground for bargain hunters.

Argentina Interest Rates Hit 40%

In Argentina, the cost of borrowing is shooting up to stratospheric levels with interest rates rising to 40 percent. The country’s leadership promised a new era that put this sort of trajectory behind it. But now, Argentina finds itself in talks with the International Monetary Fund for loans to shore up its finances.

 

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