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Trade War Impacts on Metals and Oil

President Trump’s decision to raise tariffs from 10% to 25% on $200 billion of Chinese imports, and the resulting Chinese retaliation, is likely to have only modest impacts on energy commodities and precious metals. The bigger story for these sectors is declining growth expectations that are only partially due to trade tensions. Trade tensions are, however, likely to be a major driver for industrial metals over the near-term.

TIPs Yields and Correlation to Gold

Since early 2010, the broad trade-weighted U.S. dollar index and 5-year (nominal) combine to explain 71% of inflation-adjusted daily gold price movements. Replacing nominal yields with TIPs raises this figure to 79%. Furthermore, a 100 bps increase in TIPs yields correlates with a whopping 20.5% reduction in gold prices.

The Most Recent Oil Price Drop is Troubling

When we last focused on crude oil, in mid-November, we noted that the ongoing crude oil price decline was very likely due to reduced precautionary demand where traders were acting in anticipation of higher upcoming oil production. This type of oil price drop is distinct from those caused by actual increases in supply or to an overall reduction in aggregate demand, and has mostly benign implications including slightly higher growth and lower inflation. Furthermore, these types of price swings are oil-specific, usually do not impact non-energy commodities, and dissipate reasonably quickly, taking about 18 months for oil prices to revert halfway back to their trend value.

The Investment Rationale for Uganda - Opportunities in Digital Finance

Why invest in Uganda?

  • Liberalized Economy; Ranks 83rd in the Economic Freedom Index among 180 countries. FDI is allowed in almost all the sectors
  • Politically stable and secure country
  • Attractive tourism destination in Africa
  • Abundance of under-exploited minerals and renewable energy
  • Population growth rate of 3.3%
  • Availability of tax incentives, depreciation allowances and free trade zones to facilitate investments
The Investment Rationale for Nigeria

Nigeria is a middle-income country with a mixed economic structure in Africa. The country is plagued with huge income inequalities. Nigeria is a middle-income country with a mixed economic structure in Africa. The country is plagued with huge income inequalities. Currently, the economy is dependent on the Oil sector for its earnings in foreign currency with as much as 90% contribution. However, the Oil & Gas sectorcomprises only 8.5% of the Nigerian GDP Fall in oil prices in 2016 significantly impacted the Nigerian economy that led the government to move towards diversifying the economy and reducing dependenceon the Oil sector However, diversifying the economic base has been a challenge for the country mainly due to political issues, corruption, poor infrastructure, and weak economymanagement Despite all the challenges, the Nigerian economy has been reviving and is expected to register steady growth in the coming years primarily backed by improvingeconomic fundamentals in the country― The country is expected to witness a positive GDP growth rate in the coming years with the GDP (at current prices) expected to reach US$873.9 billion in 2023from US$376.3 billion in 2017― The current account balance of the country is also improving. Current account balance as a percentage of GDP is almost in line with the US, China, UK, andother African economies― National debt as a percentage of GDP is the lowest for Nigeria when compared with selected African and international economies― Elections in 2019 will provide much needed political stability and improved policy decision making to turn business conditions favourable

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