A Look at the Week’s Global Economic Events

We take a look at two global economic updates or interesting key developments that happened recently which investors can take note of. First up, we take a look at Myanmar’s progress in fostering a conducive environment for businesses to operate in. Next, we’ll zoom in to Europe’s economy and how European shares have been affected.

Myanmar score progress on Business Environment

Apart from the sky-high property prices and poor legal and regulatory frameworks, The International Business Times reported that Myanmar is apparently making good progress in terms of fostering a conducive business environment.

On 8th January, the global risk analysis firm Maplecroft published a “good business environment” list highlighting Senegal, Guatemala, Mozambique and Rwanda, along with Myanmar, as the countries with the greatest improvements over the last five years.

The International Times wrote that all five nations are commended for their progress “in encouraging foreign investment, including moves to strengthen corporate governance, reduce regulatory hurdles, combat corruption and improve rule of law.”

Myanmar, in particular, has come a long way from its position as the riskiest nation in 2012. It was singled out as the nation with the most significant improvements from a year ago owing to key reforms from its civilian government, which only took over  the country’s leadership reins from the military in 2011.

The International Times added that reform steps by the civilian government “included enhancing investor protection and implementing a new foreign investment law in March 2013, which began to tackle important issues such as foreign ownership limits and land leasing rules”.

According to Maplecroft, Myanmar’s reforms have been so effective that if it continues to keep to up its reform-momentum over the next one to three years, the country might even be removed from the “extreme risk”  category.

Singapore-listed companies with significant economic exposure to Myanmar, such as Yoma Strategic Holdings (SGX: Z59) and Interra Resources (SGX: 5GI), might stand to benefit from increased economic activity in the nation as it develops.

Slight growth in European Union

According to Eurostat, the statistical office of the European Union (EU), GDP growth of the 17 members of the Eurozone fell by 0.3% during the third quarter of 2013, compared to the same period last year. By contrast, GDP growth across the whole of the 28-member EU grew by 0.2% year-on-year for the third quarter of 2013.

The Eurozone’s year–on-year decline in GDP for the third quarter of 2013 was less than the 0.4% contraction which had previously been predicted by Eurostat. GDP rose by 0.1 % in the Eurozone in the third quarter of 2013, as compared to the second quarter.

Nevertheless, Bloomberg reported that European stocks had posted its first full-weekly gain of 2014, “as data showed U.S. and German unemployment fell and Ireland returned to the bond market after completing a bailout program”.

The Stoxx Europe 600 Index (comprising 600 different large, mid, and small cap companies in 18 European countries) climbed 0.7 percent to 330. This is the highest that the Stoxx has reached since May 2008, according to the Bloomberg report.

The European Central Bank has pledged to keep interest rates low, and that has been seen as a strong force that helped the index to gain 17% in 2013, “its best year since 2009”.

In a sound bite provided by Bloomberg in the same report, Michael Kapler, an equities portfolio manager at Mittelbrandenburgische Sparkasse in Potsdam, Germany, said that “In an environment of low interest rates at least in Europe, supportive central banks like the ECB, and better economic data coming out of Europe and the U.S., there’s a good chance markets will head higher in the next few months.

Retail investors who are interested and wish to take advantage of the seemingly-improving economic climate in Europe can do so through the locally traded Lyxor Europe 10US$ (SGX: JC5).

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor James Yeo does not own shares in any companies as mentioned.