Economic analysis

• Audit Title

• Document No.

• Client / Site

• Conducted on

  Date

• Prepared by

• Location
  Address

• Personnel

Overview

• Key current political and macro factors for the equity markets. Importance and likely outcome.

Politics

• What is the current reform agenda? What key reforms impact directly upon the equity market, either sectors or as a whole?

• What is the election cycle? What are the key issues? How does this impact upon the equity market?

GDP Growth

• Summary GDP growth outlook

• Industrial production, inventory cycle and PMI surveys, business confidence surveys

Fiscal

• Expenditure review. Key growth items, subsidies and impact upon equity market. Income distribution effect

• Revenue review. Tax policy and impact upon equity market.

• Budget balance and financing

• Sovereign market review - local currency and hard currency debt. Flows, EMBI levels and direction

Consumption

• Employment review

• Real income review - propensity to consume and level of consumption

• Household balance sheet ( Debt levels, and the current position of asset markets - housing, equity, other)

• Consumer confidence surveys

Investment

• Outlook for investment.

• Residential investment

• Infrastructure investment

• Industrial investment

Trade Balance

• Exports (trend and key exposures, link to equity markets)

• Imports (trend and key exposures, link to equity markets)

• Trade balance (link to external sector)

Monetary Policy

• Interest Rate policy and outlook.

• Money Supply

• Currency policy, outlook and action. Include analysis of reserves.

• Macro prudential measures used and impact. Include outlook and impact upon banking sector.

• Financial sector review and transmission of monetary policy

• Central Bank / Political attitude to asset prices

External Sector

• Savings vs Investment (who saves and what is the balance like with Investment)

• Balance of payments outlook

• Capital account review (FDI, portfolio investment, other and reserves)

• Current account review (Trade above, Factor income, transfer payments - ie remittances)

Longer term issues

• Demographics