Emerging Market - Three Main Risks To Avoid

Published: Wed Mar 21 2018

During the year 2017 the experts at Bouchard Fintech noted some of the key international challenges that companies and their executives were most likely to face. One big challenge was the new US administration under Trump and their planned focus on America First when it came to international trade. Another challenge was coming from the UK with its plans for exiting the European Union. Yet another challenge had to do with concerns about hacking and issues surrounding cybersecurity.

Executives and senior managers are usually more focused on their own companies, their particular industries and markets. Meanwhile, they tend to pay less attention to bigger factors and politically induced risks that may significantly impact their operations and their overall performance.

At Bouchard Fintech, we have given thought to some of the more pressing challenges. We have mapped out various political, economic, market and trade factors that might potentially be harmful. In our research, we considered a variety of potential threats from a wide spectrum of countries and regions. The three main risks within emerging markets are identified and expanded on below.

The mass movement of refugees and migrant from Africa and the Middle East into Europe is a serious matter. The very population of Europe is seeing a demographic and ethnic alteration. This is causing a serious backlash against migrants and has fueled the rise of ultra-nationalists. Many political parties are veering towards a more protectionist stance and a rejection of some of the European ideals on movement of people.

The ongoing troubles in the highly disputed and contested parts of the South China Sea are a real area of concern. There are heightened military activities and entrenched disputes over territories, natural resources and economic zones. While these problems are more political and diplomatic, for the time being, a spark could turn the situation ugly. In turn, military action, even if localized, could hugely disrupt shipping lanes, trade routes and the movement of one third of the worlds' goods.

The notable political shifts in Latin America, and in particular in both Mexico and Brazil, may bring their own challenges. Both countries are set for presidential elections. Both countries could see a huge change in both the political leadership and in the political direction that their new administrations may select. The changes, as stated on the election trail, promise a shift in priorities resulting in a sea change for the markets, the economy and for trade.

As noted by the research of Bouchard Fintech, the three risks outlined above, could lead to financial upheavals, currency fluctuations, trade disruptions and economic shocks.

Bearing in mind the noted risks, Bouchard Fintech expects that there will be certain anticipated changes. Emerging markets are seeing financial growth and we expect that this will continue and that it will even pick up in its pace. When it comes to global players, the expectation is that they will be pouring more efforts and funds into parts of the emerging markets.
Leaders and executives would do well to take careful note of the three main risks that we have identified. They would also be remiss in their duties if they do not make contingency plans to help them weather one or more of the possible storms. Rather than simply be focused on short-sighted matters, it is important to broaden the outlook and keep a careful eye on these possible storms. With careful planning, this year could yet be a record year for growth and profits.

Written by Bouchard Fintech.

Contact Name: Bouchard Fintech
Contact Email: info@bouchardfintech.com

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