Get smart: the $60 trend catapulting emerging markets

The advent of low cost smartphones is a game changer in emerging markets (EMs). Whereas in developed markets we already had a fairly extensive network of PCs and laptops, in EMs this was not the case. With low cost smartphones – for as little as $60 – a whole group of EM consumers now have their own personal access point to the internet for the first time. In 2014, the market size for emerging market smartphones outstripped developed markets; and this is feeding through to huge investment opportunities. With mobile affordability as the key enabler, the number of internet users in these markets starts to grow exponentially. Whereas EM consumers previously may have battled with limited retail infrastructure to buy something, they can now purchase with a click of their fingers. This causes us to think about the internet’s potentially disruptive effects upon traditional bricks-and-mortar retailers, and highlights the attractiveness of certain e-commerce companies able to capture the retail and consumption potential.

Naomi Waistell, Newton

 

The advent of low cost smartphones is a game changer in emerging markets (EMs). Whereas in developed markets we already had a fairly extensive network of PCs and laptops, in EMs this was not the case. With low cost smartphones – for as little as $60 – a whole group of EM consumers now have their own personal access point … read more

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Will Japan’s snap election cost it dear?

Prime Minister Shinzo Abe has postponed a consumption tax rise originally planned for October 2015, instead opting to call a snap election, but can Japan’s highly indebted government actually afford such a delay? The fiscal hawks worry about the implications for Japan’s public debt, which will amount to almost 230% of GDP by the end of this year, according to the OECD’s May projections. Such worries, however, seem premature. While the debt numbers may seem intimidating, Japan still finances these liabilities with surprising ease. This is partly because the government also owns substantial financial assets. So Japan’s net public debt will be a more manageable 143% of GDP by the end of this year, reckons the OECD. The debt burden is also surprisingly light because interest rates are remarkably low. Japan’s net interest payments will amount to only about 1% of GDP this year, the OECD calculates, which is lower than all but one of the other G7 countries.

 

Simon Cox, BNY Mellon Investment Management Asia Pacific

Prime Minister Shinzo Abe has postponed a consumption tax rise originally planned for October 2015, instead opting to call a snap election, but can Japan’s highly indebted government actually afford such a delay? The fiscal hawks worry about the implications for Japan’s public debt, which will amount to almost 230% of GDP by the end of this year, according to … read more

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Surprise victors of a falling oil price

There is a general misperception the fall in oil price is negative for all emerging markets. In fact many of these countries are net importers which helps improve their balance of payments. For net oil importers a high oil price is a potential headwind regarding the credit worthiness of the country. So when the cost of importing oil drops it is ultimately supportive of growth and acts as a positive in terms of trade shock.

Colm McDonagh, Insight Investment

There is a general misperception the fall in oil price is negative for all emerging markets. In fact many of these countries are net importers which helps improve their balance of payments. For net oil importers a high oil price is a potential headwind regarding the credit worthiness of the country. So when the cost of importing oil drops it … read more

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