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Strongman returns


14 December 2015, London

December Bulletin Cover (no Banner)

In the December Bulletin, OMFIF explores the rise of populist parties and the return of strong leaders across Europe and neighbouring regions as a result of international political and security challenges. Our writers are sceptical whether this phenomenon will provide ‘strongman returns’ for investors.

The first-round 27.7% score for the National Front in regional elections in France on 6 December highlights the growing strength of anti-integration sentiment in mainstream Europe. The tally fell slightly to 27.4% in the second leg on 13 December, when the FN were beaten into third place. The political power of President Vladimir Putin has grown as external pressure on Russia – from Nato in the west to Isis in the south – has boosted support for his actions in Ukraine and Syria. In Turkey, Poland and Hungary, similar developments appear underway.

Across many countries the desire for physical security may trump concerns over freedom and liberty, with important consequences. As veteran commentator and historian Michael Stürmer argues, ‘Refugees and terrorism add up to more than the usual crisis. The intersecting geometries form a challenging combination: a Middle East arc of instability meets a US pivot to nowhere and the pernicious cycle of European Angst. This is a toxic mixture.’

The divergence in monetary policy between the US and Europe is another important theme. Darrell Delamaide highlights growing support for a US interest rate rise when the Federal Open Market Committee meets on 15-16 December. OMFIF’s Second Main Meeting in North America, at the Federal Reserve Bank of Atlanta, with FOMC members Dennis Lockhart (Atlanta Fed) and James Bullard (St. Louis Fed) on 12-13 November, and OMFIF’s meeting in London with Esther George (Kansas City Fed) on 13 November, discussed these issues. David Marsh and Ben Robinson expound the risks of currency unrest as a result of the expected Fed rate rise, based on 70 years of monetary history.

The extensively trailed International Monetary Fund decision on 30 November to introduce the renminbi into the special drawing right provides a further focus. This was high on the agenda at the OMFIF policy and investment seminars with the National University of Singapore’s Lee Kuan Yew School of Public Policy on 1 December in Singapore and with the Reserve Bank of Australia in Sydney on 4 December.

The OMFIF Advisory Board provides its review of 2015, ranging over China’s economic rebalancing, the global trade slowdown, the Argentine elections, India Prime Minister Narendra Modi’s policy progress, and the creation of the Asian Infrastructure Investment Bank. We review our New Year predictions for 2015, made in January, which emphasised divergence and crisis as two important themes for the year.

Other highlights of the December 2015 edition:

  • Jean-Claude Bastos de Morais, founder of the Quantum Global Group, discusses the growing opportunities for investment in Africa – the subject of a new book from OMFIF Press.
  • David Smith, former representative of the UN Secretary-General in the Americas, explores the challenges facing Argentina’s new President Mauricio Macri.
  • Haihong Gao, professor at the Chinese Academy of Social Sciences, analyses the challenges of greater currency internationalisation.
  • Elliot Hentov and George Hoguet of State Street Global Advisors enumerate the benefits and burdens of China’s membership of the IMF’s special drawing right.
  • Kevin O’Nolan, portfolio manager at Fidelity Worldwide Investments, explains the political reforms necessary to rebalance China’s economy.
  • Stefan Bielmeier, chief economist at DZ Bank, emphasises the effect of the European refugee crisis on Chancellor Angela Merkel.
  • Linda Yueh of Oxford university discusses the emerging model of central banking and the prospects for increased public oversight.
  • Jonathan Fenby, director at Trusted Sources, tracks the growth of consumption in China and the obstacles facing the new Five Year Plan, beginning in 2016.


The OMFIF Bulletin is available to OMFIF members, and to non-members on a subscription basis. To subscribe please contact: membership@omfif.org.

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