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Merrill lynch reprot. Merrill Lynch does and seeks to do business with companies
covered in its research reports. As a result, investors ...
Submitted by u944822 on July 6, 2007
Category: Miscellaneous
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Merrill Lynch does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their
investment decision.
Refer to important disclosures on page 10 to 11. 10570583
GEM and FX Strategy
The coming correction in
global imbalances
The "central, global financial irony of our times" is
poor countries, needing capital to finance development, are sending large
amounts of money to rich countries such as the US on an unprecedented scale.
This global imbalance will start to reverse in 2007 ...
via US slowdown, a decline in global savings and an increase in the supply of
non-US financial assets, with implications for the USD and emerging markets.
The US dollar is likely to weaken
particularly against currencies that are large providers of global capital, notably
the Chinese renmimbi, the Japanese yen and the Russian ruble.
EM bull market switches toward domestic demand themes
as emerging economies spend their savings to fund strong domestic economic
activity (Chart 1).
EM capital markets boom
as M&A activity, issuance and leverage in under-capitalized EM assets in real
estate, consumer and infrastructure sectors continue to escalate.
Chart 1: Current account surplus in EM & DM
Current account balance, US$bn
-800
-600
-400
-200
0
200
400
600
800
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006e 2007e
Emerging
Dev eloped
Source: Merrill Lynch estimates
Investment Strategy
Emerging Markets | Global
08 January 2007
Michael Hartnett +1 212 449 3600
...
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