Sadly, as in any relationship, there must be periods of both joy and despair. Take Brazil, for example. In late 2010, foreign ownership taxes on sovereign debt were raised to penal levels. By denying the speculative investor’s advances, it was hoped currency gains would be benign and that the country’s exports could remain competitive.
In the third quarter of 2011, however, when equity markets were in panic mode following another
bout of eurozone woe, policymakers put in place measures to reverse the capitulating value of the
Brazilian real. So, within such a tempestuous relationship, where do things stand now? And what are our thoughts about the future?
Broadly speaking, in a world so starved of growth, emerging markets have been one of the few beacons of optimism to which the global economy could look. But, with no sign of a reversal in the fortunes of developed markets, have the prospects for the developing world also begun to dim? Certainly the idea of ‘decoupling’ has already been widely rebuffed, but the loss of economic momentum in the emerging world still seems to have caught the market by surprise. Given the level of both fiscal and monetary firepower still at policymakers’disposal, should we expect a swathe of stimulus to get growth back on track? And, even if such measures are deployed, should we show restraint in our expectations of an economic resurgence? More >
Head of Fund Research