Emerging markets outlook for 2017

As the world awaits President-elect Trump's first official press conference, the global markets are on edge, bracing for potential shifts in trade and fiscal policies. The uncertainty surrounding these policies is reverberating across emerging markets, including South Africa. James Tutt, portfolio manager at Absa Asset Management, sheds light on the economic outlook for the country in 2017 amidst these global developments. Trump's prolific use of Twitter has become a source of insight and speculation for investors, with every tweet potentially impacting the direction of the markets. However, the focus remains on his administration's stance towards China and Mexico, as well as the implications of proposed corporate tax reductions on the broader economy. The market reaction to these policy changes is unpredictable, with the fixed income space particularly sensitive to shifts in interest rates. While developed bond markets are anticipating a shift towards equities, the outlook for emerging market bonds is more nuanced. Factors such as inflation, employment figures, and currency volatility will play a significant role in determining investor sentiment. South Africa, with its high currency volatility, presents both challenges and opportunities for investors seeking real returns. The global political landscape, including Brexit and upcoming elections in Europe, adds another layer of complexity to the market dynamics. Volatility has become the new normal, with investors bracing for a tumultuous year ahead. As the world navigates through these uncertainties, South Africa remains a key player in the emerging market landscape, offering potential growth opportunities amidst the challenges. The road ahead is fraught with twists and turns, but with strategic insights and a keen understanding of the global economic landscape, investors can weather the storms and capitalize on emerging opportunities.