EMIA Week in Review: China’s 19th Party Congress, Argentine Midterm Elections & More

October 23, 2017


“Untouchable” Temer Does It Again: Brazilian Congress Will Support His Full Presidential Mandate


  • A Brazilian congressional committee on Wednesday voted against making President Michel Temer stand trial on corruption charges.

  • The 39-26 vote by the justice committee in the lower house was non-binding but gives Temer political momentum ahead of the full chamber taking up the issue.

  • Temer, the first president in the country to face criminal charges while in office, is accused of obstruction of justice and racketeering.

  • He denies any wrongdoing and has argued that the country needs him at the helm to bring in market-friendly reforms after two years of deep recession.


China’s Maritime Belt Road Free Trade Agreements In South Asia

China Briefing

  • China is actively seeking to improve its trade relations with South Asia.

  • Deeper connectivity, once achieved under the Belt and Road Initiative (BRI), will boost the development and commercial aspirations of South Asia’s lagging economies, and open up new markets for China.

  • However, China has yet to convince India; the latter is against the China-Pakistan Economic Corridor due to geopolitical concerns.

  • This article briefly discusses the status of China’s free trade agreement (FTA) talks with the South Asian countries. The talks hold significance for the BRI region, and could lay down the rules and norms that govern the region’s future trade order.


Argentina: Starting to Fire on all Cylinders


  • The much-anticipated economic recovery promised by the Argentine government led by President Mauricio Macri since it came to power in December 2015 is now fully materialising.

  • After registering a tentative increase in domestic economic activity towards the end of last year, all the evidence suggests that there is now a healthy increase in activity in all economic sectors.

  • This in turn has led to job creation to the benefit of the general population.

  • But as positive as these early signs of a return to healthy economic growth are, the still-high domestic rate of inflation remains a singular problem for the government and its attempts to convince the local population that its economic reform programme can bring long-term sustainable economic growth for the country.


Singapore’s Inward Re-Domiciliation Regime: What You Need to Know

ASEAN Briefing

  • One of the key amendments to the Singapore Companies Act, the inward re-domiciliation regime came into effect on October 11, 2017.

  • The amendment allows foreign companies to relocate their business headquarters to Singapore instead of setting up subsidiaries, without losing their corporate history or brand identity.

  • This means that a foreign company located outside of Singapore may become a registered Singapore private company limited by shares, domiciled in Singapore and continue its operations under the laws of Singapore; the company need not wind up its business activities and set up a new company in Singapore.

  • Re-domiciliation in Singapore does not create a new legal entity. It also does not affect the property, rights or obligations of the foreign company, or affect any legal proceedings by or against the foreign company


Colombia: SSJ Tender Raises Expectations

Hydrocarbons Colombia

  • The 14-week schedule that was initially established by the National Hydrocarbons Agency (ANH) for the Sinú- San Jacinto tenders was extended to 24 weeks, after different companies interested in participating in the auction had expressed their discomfort with the "tight" schedule.

  • In response to the companies’ concern, the ANH decided to extend the schedule by 10 weeks, so that firms had enough time to study and analyze the geological information, and, based on the prospectivity of the reservoirs, decide on their investments.

  • "Several companies interested in participating in the auction have already said that the new waiting period will give them enough time to analyze the data that the subsoil reveals of its estimated potential, and thus make the financial projections that are required," said Carlos Mantilla McCormick, consultant and former ANH director.

  • According to the new schedule, the deadline for receiving suggestions and observations on the terms of reference was set for October 11th, and the adjusted text will be published two days later (October 13th).


S&Ps Downgrades Guatemala Over Political Crisis


  • On 19 October, international credit ratings agency Standard & Poor’s announced that it had lowered its long-term rating on Guatemala to 'BB-' from 'BB' on “lower economic growth prospects and recurrent political instability”.

  • The downgrade has been prompted by the political crisis which emerged in late August in which the United Nations-backed anti-impunity commission in Guatemala (Cicig) and the attorney general’s office called for President Jimmy Morales to be investigated over illicit campaign finance.

  • This prompted Morales to (unsuccessfully) order the expulsion of Cicig’s director Iván Velásquez.

  • The crisis intensified after the national legislature refused to heed the request and then voted to curb penalties for illegal election financing (since repealed as well as being suspended by the constitutional court).


Investing in Kazakhstan: Asia’s Overlooked Powerhouse


  • Kazakhstan, a nation of 18 million people, is central Asia’s largest economy and a former member state of the USSR.

  • They’ve arguably become the region’s biggest success story since the Soviet Union’s collapse in 1991 and now have a GDP per capita which exceeds Russia’s.

  • Vast oil reserves, pro-investment policies, and a strategic position should lead to a bright future. But we think Kazakhstan’s location is their greatest asset.

  • That’s because Chinese businesses and the government itself are financing billions of dollars’ worth of infrastructure in nearby countries. New railways, ports, and other projects are popping up all over Asia.


Campaigning for Argentina Midterms Ends in Atmosphere of Uncertainty


  • On 19 October, the formal campaigning period ahead of Argentina’s 22 October midterm federal legislative elections came to an end with no political party choosing to hold closing campaign rallies.

  • The decision by the political parties not to hold any closing campaign rallies followed the 17 October announcement by investigators that the body of a man had been found in a river in the southern province of Chubut.

  • The body appears to be that of Santiago Maldonado, the political activist who has been missing since August.

  • The Maldonado case has dismayed Argentina and dominated the electoral campaigning period after Maldonado’s relatives and local human rights groups accused the national gendarmerie (GNA) of being behind Maldonado’s enforced disappearance, and the federal government led by President Mauricio Macri of trying to cover this up.


Key Takeaways from Xi’s Speech at China’s 19th Party Congress

China Briefing

  • Chinese President Xi Jinping announced the beginning of a “new era” for socialism in China and laid out his vision for the country’s future in his nearly three and a half hour speech to open the 19th National Congress of the Communist Party of China.

  • Xi’s speech, though short on specifics and riddled with political jargon, declared a bold direction for China’s political, economic, and cultural ambitions.

  • The goals, priorities, and challenges highlighted in the speech will serve as an important roadmap for Chinese policymakers as Xi enters his second term as China’s president.

  • In his speech, Xi noted, “This is a new, historic juncture in China’s development,” which requires “socialism with Chinese characteristics for a new era.” Accordingly, Xi set out a long-term timeframe to achieve “the great rejuvenation of the Chinese nation”.


Russia’s Growing Influence in Venezuela is Part of a Wider Strategy

Global Risk Insights

  • Russia’s cash and credit are helping to keep Venezuela politically and economically afloat. For Russia, access to Venezuela’s oil market is part of its objective to achieve influence in the Latin American region – and beyond.

  • Russian support for Venezuela may prove pivotal for the beleaguered country’s economic and political survival, but Venezuela’s difficulty is definitely proving to be Russia’s gain.

  • The Kremlin’s pragmatic approach to Latin America is strategically positioned on the backdrop of Donald Trump’s ‘‘America First’’ policy and China’s substantial curtailment of credit to Venezuela.

  • This reflects Russia’s broader ambition to influence the nature of the global order, preferring a multipolar world to the dominance of superpowers such as the United States and China.


Mercosur/EU Trade Deal Again Faces French Foot Dragging with Irish Support


  • France will propose changing the European Commission’s mandate to negotiate a trade deal with Mercosur bloc to include food safety provisions, its envoy to Brazil said on this week.

  • French ambassador Michel Miraillet underlined there was heightened concern in the European Union over food safety after a series of recent scandals, including the bribing of inspectors by meatpackers in Brazil to overlook sanitary practices.

  • Miraillet said France expected “four or five” EU countries to back its plan to propose updating the Commission’s negotiating authority.

  • “We don’t know what will happen, but this is one proposal that will be made. The mandate dates from 1999 and needs to be modified,” the diplomat told Brazilian reporters.


Brazil: Trying to Restore Investor Confidence


  • Attracting more investment into Brazil could be integral to reviving the country’s domestic economy.

  • With this in mind, the government led by President Michel Temer has forged ahead with a privatisation plan targeted at foreign companies.

  • On 27 September, the Temer government raised R$12.13bn (US$3.83bn) in revenue from selling off four hydroelectric power plants in Minas Gerais state owned by state-owned energy company, Cemig.

  • This was almost 10% better than the R$11bn (US$3.47bn) the government had expected to get, suggesting that interest in investing in Brazil is starting to pick up.


China Has Entered a “new era” and should “take centre stage in the world”, Xi Announces


  • China has entered a “new era” where it should “take centre stage in the world”, President Xi Jinping says.

  • The country's rapid progress under “socialism with Chinese characteristics” shows there is “a new choice for other countries”, he told the Communist Party congress.

  • The closed-door summit determines who rules China and the country's direction for the next term. Xi has been consolidating power and is expected to remain as party chief. The congress, which takes place once every five years, will finish on Tuesday. More than 2,000 delegates are attending the event, which is taking place under tight security.

  • Shortly after the congress ends, the party is expected to unveil the new members of China's top decision-making body, the Politburo Standing Committee, who will steer the country.


Argentine Election Campaign Suspended following Discovery of Body Presumed to be Missing Protestor


  • Major parties running in Sunday’s mid-term congressional election in Argentina suspended their campaigns on Wednesday after a body, thought to be that of a young protester who went missing more than two months ago, was found in a river.

  • A government spokeswoman said President Mauricio Macri’s Cambiemos, Let’s Change, coalition would halt campaigning for the rest of the day after investigators on Tuesday discovered the body in the Chubut River in the country’s southern Patagonia region.

  • The remains were found near the site where indigenous rights activist Santiago Maldonado was last seen at a tribal rights protest on August first.

  • Ex-president and now Senate candidate Cristina Fernandez also suspended campaigning, along with other major figures vying for Congress, their campaigns said.


Will Talos share its oil with Pemex?

Hydrocarbons Mexico

  • Houston-based Talos Energy discovery of 2Bbls in July caught the attention of the industry. However, the firm did not expect that it would have to share part of the oil with Pemex.

  • Talos’ was the first major discovery since the government opened the industry to foreign investment in 2013, but it did not expect the site to extend beyond the boundary of its exploration block, to an adjacent block owned by Pemex, or that it would have to share part of the oil it with it.

  • Back in July, the consortium said that oil “might extend into a neighboring block.” Weeks later, Pemex’s CEO José Antonio González announced that his company, which has rights over that block, would fight for part of the oil.

  • The Mexican government is now rushing to draft a legal framework to establish how this discovery will be shared, as well as the ones that will come, but the regulation could define the future of Mexico’s entire energy plan.


Brazil: Electoral Reform Falls Short of the Mark


  • Brazil’s general election may be a year away, but frantic preparations for the event are already underway.

  • Just before the October 7 deadline, President Michel Temer sanctioned a series of electoral reforms that had been approved by the federal congress designed to reduce the number of political parties operating in Brazil, cap campaign financing, and limit the power of coalitions.

  • These may improve some aspects of Brazil’s electoral model but are a far cry from the “totally different” political system which the president of the chamber of deputies, Rodrigo Maia, had envisaged.

  • The reforms now pass to the supreme electoral tribunal (TSE), which will then publish a full list of the new rules by March 2018


What to Expect at China’s 19th Party Congress

China Briefing

  • On October 18, China’s top leadership will convene at the Great Hall of the People in Beijing to begin the weeklong 19th National Party Congress of the Communist Party of China.

  • The Congress is the most important political event in China, where the Party’s top representatives meet once every five years to announce changes to top leadership positions and set out the Party’s – and therefore China’s – direction for the next half decade.

  • This year, around 2,300 delegates will assemble for the Congress. The delegates consist of Party representatives from China’s national party organs, provinces, leading municipalities, the military, and state-owned enterprises (SOEs), as well as some private sector representatives and other influential figures.

  • The stakes for the 19th National Party Congress are high: five out of seven members of the Politburo Standing Committee (PSB) – the most powerful decision-making body in China – are set to retire, leaving only President Xi Jinping and Premier Li Keqiang remaining.


The “Amazon Effect” is coming to Oil Markets


  • While OPEC mulls over further steps to once again support falling oil prices, tech startups are quietly ushering in a new era in oil and gas: the era of the digital oil field.

  • Much talk has revolved around how software can completely transform the energy industry, but until recently, it was just talk.

  • Now, things are beginning to change, and some observers, such as Cottonwood Venture Partners’ Mark P. Mills, believe we are on the verge of an oil industry transformation of proportions identical to the transformation that Amazon prompted in retail.

  • According to Mills, the three technological factors that actualized what he calls “the Amazon effect”, which changed the face of retail forever, are evidenced in oil and gas right now. These are cheap computing with industrial-application capabilities; ubiquitous communication networks; and, of course, cloud tech.


AfricaOnline Leads Digital Economy Evolution in Ghana

BizNis Africa

  • While Africa still has very real infrastructure development challenges, the continent continues to embrace the digital economy as a platform for growth and new opportunities.

  • This is evident in the milestone reached by Ghana’s oldest ISP, AfricaOnline.

  • “It’s been a privilege to watch this business grow into a formidable player within the Ghanaian economy.” says Mathew Welthagen, Gondwana International Networks, parent-company to AfricaOnline Chief Executive Officer.

  • “As we celebrate 20 years as an Internet and related connectivity services provider, we recognise the pivotal role AfricaOnline has played in Ghanaian business and look forward to its progress as it evolves its service offering based on changing technology, customer demands and the developing digital economy,”


China’s Credit Rating Downgraded by S&P, “but might still be too good”


  • China's credit rating has been downgraded by Standard & Poor's (S&P) because of worries over the rapid buildup of debt in the country.

  • S&P cut China's rating by one notch from AA- to A+, saying its debts had raised “economic and financial risks”.

  • The International Monetary Fund warned in August that China's credit growth was on a “dangerous trajectory”.

  • S&P's move puts its rating for China on a par with the two other major credit rating agencies, Moody's and Fitch.


Modi’s Rise to Power comes with Opportunities for Reform

Global Risk Insights

  • The Bharatiya Janata Party (BJP) has rapidly cemented its position as the unrivalled leader of Indian politics.

  • Pushing forward on a platform that combines reform and Hindu nationalism the BJP, with Prime Minister Narendra Modi at its head, has made massive gains across India, beating back the Congress Party, its rival, at nearly every turn.

  • Modi’s power and popularity have made significant reforms possible, the biggest of which is perhaps the passing and implementation of the Goods and Services Tax (GST), akin to a value-added tax.

  • Modi hasn’t been entirely successful, however. The end result of the GST, a complex multi-banded system far from the single tax rate envisioned by businesses, may be indicative of his political limitations.


Maduro Declares Victory in 17 of 23 States; Opposition Demands a Recount of Votes


  • President Nicolas Maduro’s government won a landslide victory in closely watched regional elections in Venezuela, according to official results that the opposition said were “suspicious” and rejected results.

  • Maduro’s party on Sunday apparently won governorships of 17 of the 23 states with the opposition Democratic Union Roundtable (MUD) coalition taking only five, according to the results announced by the National Elections Council.

  • The official turnout was 61.14%. Maduro said his government had scored an “emphatic victory” over its rivals.

  • Public opinion surveys had predicted that the opposition would win a majority of state governorships despite alleged government dirty tricks to suppress a high turnout.


Singapore’s Free Trade Agreement with Turkey Comes into Force

ASEAN Briefing

  • The much-awaited Turkey-Singapore Free Trade Agreement (TRSFTA) went into effect on October 1, this year.

  • The agreement paves the way for freer movement of goods and services, and further investment opportunities between the two countries.

  • The TRSFTA was first signed in November 2015 and covers a wide range of areas including goods and services, e-commerce, intellectual property rights, competition, and transparency.

  • According to the official press notification, tariffs for Singapore’s exports to Turkey on 80 percent of all tariff lines will be eliminated under the TRSFTA. The coverage will increase to more than 95 percent of all tariff lines over a period of 10 years.


IMF: Latin America Must Crack Down on Corruption and Improve Governance


  • Latin American and Caribbean governments need to crack down on corruption in order to make their economies more durable and the benefits of growth more widespread, the International Monetary Fund said on Friday.

  • High levels of corruption correlate with high inequality and weaker development, the Fund said in an assessment of the region's economic health.

  • “Weak governance and entrenched corruption are weighing on inclusive and sustainable growth in Latin America and the Caribbean.”

  • High levels of corruption appear to divide the emerging economies of the region from advanced economies which benefit from better rule of law, the report suggested.

Tags: argentina, brazil, cambiemos, china, communist party congress, emerging markets, emia, frontier markets, india, macri, midterm elections, modi, politics, temer, week in review, weekly roundup, xi jinping
Posted in Global, Macro Economics, Macro Economics