In This Week’s Issue…

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

Weakening China, Indian Expansion, Korean Snoozer, ASEAN Markets, Mexican Peso & Russia Kick Off.

China Data Dissapoints

Weak Chinese data, rising trade tensions and a more hawkish U.S. Federal Reserve sent shivers through emerging market stocks on Thursday, but currencies bounced as the dollar weakened ahead of a possible turning-point European Central Bank meeting. There was a surprise for markets when the People’s Bank of China decided not to follow the Fed’s lead and held rates unchanged, signaling renewed confidence in yuan stability.

India Expands

Modi’s Indian economy expanded at an annual rate of 7.7% in the first quarter of 2018, compared to 5.6% a year ago, as manufacturing and investments picked up steam.

Korean Snoozer

Donald Trump went to Singapore, said North Korea’s beaches would be good for condos and hotels and crushed Kim Jong Un’s hand during their highly watched handshake. What’s more, the tone of the meeting was positive and Trump likely hopped aboard Air Force One thinking he was one step closer to a Nobel Peace Prize. So why is Trump’s meeting with North Korea’s Kim being ignored by the markets? Here is all you need to know on this historic meeting.

ASEAN Market Views

We remain positive on the outlook of ASEAN economies in 2018 which will continue to be driven by fiscal spending and the spill over from export growth to domestic demand. We expect to see increased infrastructure and government spending in Indonesia, Philippines and Thailand while consumption should recover as the strength in last year’s exports should translate into domestic demand as companies hire more employees or invest more in capacity to meet the higher demand. Further boost to consumption will also come from the various government consumption and spending especially in the lead up to the elections to be held in Indonesia and Thailand.

Mexico’s Peso remains the bellwether for Emerging Markets

In the turmoil that has struck emerging market currencies over the past six weeks the headlines have been grabbed by the Turkish lira, the Argentine peso  and, in the past week, the Brazilian real. But what of the Mexican peso, traditionally seen as a bellwether of sentiment towards emerging markets  as a whole? It crashed to an all-time low against the US dollar after the election of Donald Trump to the US presidency in November 2016. After staging a comeback, it is heading back in that direction, shedding 12 per cent of its dollar value since mid-April.

Investing Goals: Russia

The economic benefits of hosting a World Cup may be short-lived, but fundamentals for the Russian stock market seem positive.

Russia still looks cheap, with the RTS Index currently offering a price/earnings ratio of 7.7x, compared to the MSCI Emerging Market index’s 16.5x. Russian-listed companies also provide strong average dividend yields of 5%, and payout ratios are expected to increase from 37% to 50%.

And it is no longer just about oil and gas companies either –  energy stocks still make up around half of the constituents in the RTS Index, but there are a growing number of consumer firms for investors to tap into.


Key charts you should look at

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