1 Emerging markets to stay relevant (Jim O’Neill in
Gulf News) Casual observers might think that 2016 was a disappointing year for
so-called emerging markets. In fact, some of these countries have delivered the
year’s best investment returns, while certain developed-country markets have
fared poorly.
Right now, the prevailing emerging-market outlook
predicts that under Donald Trump’s administration the US will expand its
fiscal-stimulus policies, and that the Federal Reserve will tighten monetary
policy. This, in turn, will strengthen the dollar, which could create widespread
problems in emerging markets.
But there are four reasons to doubt the conventional
wisdom. For starters, while markets have performed well in the weeks since
Trump’s election, investors should be wary of any apparent consensus. No one
can confidently predict what shape Trumponomics will actually take.
Second, while the decades-long rally in government
bonds might finally be coming to an end, it is not obvious that the dollar will
remain strong indefinitely, even if it does appreciate relative to other
currencies in the near term.
A third consideration for 2017 is that fiscal
expansion in the US could benefit commodity-producing countries, by
strengthening cyclical and global growth. If commodity prices rise, as they
have in recent weeks, emerging-market currencies could appreciate as their
terms of trade move in a positive direction.
Finally, any forecast must account for China, the
emerging-market juggernaut. The rise of the Chinese consumer is surely the
single most important economic trend in the world today, and trade-bashing
populists in the West, such as Trump, would do well to pay attention.
2 Madrid bans half of cars to fight pollution (The
Guardian) Madrid has ordered half of most private cars off the roads on
Thursday to tackle worsening air pollution, a first in Spain. The restrictions
will operate between 6.30am and 9pm and will be re-evaluated daily depending on
pollution levels.
The measure is activated when levels of harmful
nitrogen dioxide in the atmosphere go above 200 microgrammes per cubic metre in
at least two measuring stations for two days running, and if the air is
unlikely to clear imminently. There are exceptions to the ban, such as for
mopeds, hybrid cars, those carrying three people or more or used by disabled
people. Buses, taxis and emergency vehicles are also exempt.
With 3.2 million residents and 1.8m cars, Madrid
often suffers from bad bouts of pollution. The move to ban half of cars is
level three on a scale of four anti-pollution measures. Level four bans taxis
from the city, except those that are hybrid cars.
3 ‘Bosses don’t deserve big pay packets’ (BBC) The
link between what bosses are paid and a company's financial performance is
"negligible", new research finds. The median pay for chief executives
at Britain's 350 biggest companies was £1.9m in 2014 - a rise of 82% in 11
years - the study by Lancaster University Management School found.
However, performance as measured by return on
capital invested was less than 1% during that period. The report's authors said
the findings suggested a "material disconnect". The study said the
increase in executive remuneration was largely driven by performance-based pay.
It also said the metrics typically used to gauge
company performance, such as total shareholder return and earnings per share
growth, were too short termist. The research suggested the need for "a
more refined discussion about the type of performance measures employed"
rather than remuneration levels and performance-related pay arrangements alone.
Prime Minister Theresa May said she wanted to stop
an "irresponsible minority" of companies acting badly and ensure
"everybody plays by the same rules". Among the measures under
consideration are pay ratios, which would show the gap in earnings between the
chief executive and an average employee.
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