Recent policy decisions by China, Mexico and Argentina see markets ending on a high note this year with cash flowing into emerging markets funds. The optimism comes from China’s upward revision of GDP forecasts, and holding 1 and 5 year loan rates steady. Mexico has opted to for a conservative 25bps rate cut, and a sharp correction to Argentina’s current account balance from smaller imports and larger agricultural exports is seen as a definite positive for the country.
- The market was surprised when China made a conservative decision to keep its policy rates unchanged.
- The year is ending strong for emerging markets, with a notable upward revision of China’s 2020 GDP outlook.
- Mexico made a 25bps policy rate cut as their inflation slowly lowers despite concerns over the minimum wage hike.
“China’s overall policy stance remains accommodative, but the reasons behind high funding costs for private companies are largely structural.”