Macron Win Positive for European Risk AssetsWe expect that Macron’s future actions will be in the tradition of supply-side reforms, coupled with socially-responsible stabilizers. As fears of political unrest have eased in the short-term, we believe reflation trades will take center stage again, with a renewed focus on economic fundamentals. As political risk has eased, the potential for tapering talks has intensified and could impact the currently very low level of European interest rates.
India: Reforms Process will not Fasten After Elections' OutcomeThe demonetisation policy has caused a temporary drop in the economic cycle and economic conditions pre-demonetisazion will be restored soon. We expect little support by monetary and fiscal policy to the Indian economy for the time being. In our view, recent elections' outcomes will not speed up the legislative reforms process.
China: Supply-side Adjustments to Facilitate a Soft LandingChina's economy seems to hold up relatively well at the beginning of 2017. We expect the economy to cool later this year, but we think China could handle it to achieve a soft landin and limit downside risks. Implementation of structural reforms remain a top political priority.