24th October 2019

Written by Juan Palenzuela, Researcher

Edited by David Gaffney, Partner

Good morning,

South America is known for its diverse and rich culture, its natural resources, and its political instability. The past month has really reinforced the latter characteristic. 

In Ecuador, the removal of a fuel subsidy prompted protests that forced the government to physically flee the capital, Quito. Reversing the subsidy was meant to be a solution, but has only created new problems. Ecuador has $64 billion in public debt, more than half the gross domestic product, and the government has a $10 billion annual budget deficit, about a third of the entire budget. When the country negotiated an IMF package earlier this year, one of the conditions was that it would take concrete steps to balance the budget. But with the government restoring the fuel subsidies to ease social pressure, that has become even more difficult. 

Chile, in contrast, would not appear to be prone to social upheaval. The country tops the region in virtually all development measures: GDP per capita, the UN’s Human Development Index and multiple freedom and democracy rankings. Paradoxically, though, it has suffered the most. Protests there have resulted in 18 deaths during the past few days and a presidential apology and promises of economic reforms have failed thus far to quell the public anger. Despite the country’s excellent development performance, Chile also tops income inequality tables and a rise in public transport fares has been the last straw for the poorest Chileans, who have also been forced to bear rising prices of water, energy and healthcare.

Lastly is Bolivia, the latest country to join the region’s wave of protests, albeit for more political reasons. There, incumbent president Evo Morales ran for a fourth term in Sunday’s poll, even though the constitution allows a maximum of two. In an attempt to make his quest for power more elegant, Morales called a referendum on the matter in 2017, which he lost. Regardless, he proceeded to force a judicial review through the party-controlled supreme court which concluded that not allowing him to run would violate his human rights

While Morales won the vote on Sunday, the margin of victory may not be wide enough to avoid a second round. Many in Bolivia are now understandably wary of what the president will do next, which all seems quite unnecessary, given that Morales actually enjoys great popularity. Bolivians have witnessed sustained economic growth exceeding four per cent a year on average since he took office in 2006, making Bolivia the envy of many of its neighbours. Poverty has fallen by about half, and a new urban middle class started to emerge. Morales could have groomed a young and able successor to run for elections and secure some continuity to build on his achievements. Instead, he has taken the autocrat’s path and is now risking his own legacy.  

What will this wave of protests mean for the region over the longer term? The results will vary. In Chile, one of the region’s most solid democracies, we can expect real policy changes to reduce inequality. The government has already vowed to increase the minimum wage and introduce a higher tax bracket, as well as implementing a new welfare package

In Bolivia, however, the populist government will likely move its party-controlled machinery to weather the storm, akin to Nicolás Maduro’s handling of years of social pressure in Venezuela.  

In general, these protests are a call for more competent leadership in South America, where unpopular governments facing fiscal problems have failed to deliver on behalf of angry voters who are tired of corruption, poor public services and a general lack of economic dynamism.  


The US is set to lift sanctions imposed on Turkey just nine days ago over its invasion of northern Syria, according to President Trump. The decision came after Russia agreed with Turkey to deploy troops to extend a ceasefire along the Syrian border. The president also reinstated yesterday that he will vow to keep a small number of troops in parts of the country to protect oil installations. 

Google announced that it has developed “quantum supremacy”, thanks to a supercomputer that can carry out a calculation beyond the ability of today’s most powerful supercomputers. The results, published in the journal Nature, show that Google’s quantum processor is able to perform a calculation in three minutes and 20 seconds that would take the most advanced classical computer, known as Summit, approximately 10,000 years to complete. 

The Pentagon has begun planning for a quick withdrawal of American troops from Afghanistan in the event that Donald Trump takes a sudden decision to do so. In the plan, forces could be evacuated in a matter of weeks. While there is currently no order to withdraw, the US has quietly cut troop numbers by 2,000 in the past year, and is getting ready to sign a peace agreement with the Taliban. 

Business & Economy

Boeing signalled yesterday that it could stop share buybacks for the coming years until the 737 Max returns to service. The company’s cash position has been seriously eroded by the global grounding of the jet, compounded by the extra costs associated with compensating its customers (airlines) of the 737 programme. Boeing has been unable to deliver any aircraft at all, or receive any payments for new jets, since the grounding in March. 

Energy supplier Toto went bankrupt yesterday, becoming the 16th small provider to go bust since the start of last year. The company had 134,000 domestic customers, 43,000 of whom it bought from Solarplicity, another small failing supplier, in July. The energy regulator, Ofgem, said it did not have the power to step in at the time of that handover, but that the supply of energy to affected customers will remain protected. 

Impossible Foods has announced that it is ready to further expand into Europe, as it has applied to produce its plant-based burgers in the region. The company appealed to the European food safety authority to produce soy leghemoglobin, which is made with genetically engineered yeast. Impossible Burgers are currently sold across Europe, but all stock is flown in from the US. 


What happened yesterday?

Global equities performed well yesterday as investors welcomed positive Sino-US trade developments and awaited another Brexit parliamentary showdown in London. 

This was especially the case in Europe and America. By the end of trading, the Stoxx 600 was 0.09% higher at 394.59, as Germany's Dax rose by 0.05% to 12,754.69 and the French CAC 40 was up by 0.17% to 5,657.69. Over the pond, the Dow rose 45.85 points, or 0.17% to close at 26,833.95; the S&P 500 climbed 0.28% to end the day at 3,004.52, and the Nasdaq Composite gained 0.19% to 8,119.79 

British equities also performed well, in spite of the Brexit cloud. Prime Minister Boris Johnson paused his Brexit bill on Tuesday after MPs voted in favour of his deal but rejected the PM's attempts to push it through the Commons in three days. Johnson is expected to call for a general election if EU leaders agree to grant the UK a Brexit extension until January. The FTSE 100 climbed 0.68% to 7,212.49, the FTSE 100 was flat at 7,212.14, while the pound was up 0.1% against the dollar and the euro at 1.2884 and 1.1583, respectively. 

Source: FTSE 100, Financial Times

Whats happening today?


Rdi Reit


Braemar Shipping

Q3 Results

Astrazeneca Kcell Regs Novolip Regs Royal Bank of Scotland 


Aberforth Spli. Alumasc Group Myanmar Oil&gas Regs Renishaw South32

Quaterly dividend payment

Fair Oaks Yew Grove Reit.

Final dividend payment

IG Group Holdings

UK Economic Announcements

(09:30) BBA Mortgage Lending Figures

Int. Economic Announcements

(12:45) ECB Interest Rate (EU)  (14:30) Continuing Claims (US) (14:30) Durable Goods Orders (US)  (14:30) Initial Jobless Claims (US) (15:00) New Homes Sales (US)

Columns of Note

Data is extremely important – not just for businesses, but also for nations, especially developing ones looking to reach their development targets, says David Pilling in the FT. African States, for example, simply don’t know enough about their people, and because of this it is difficult to assess where they sit in reaching the UN Sustainable Goals. This could be fixed with the use of technology, including the electronic tagging of houses and online applications for government services, to throw light on citizen’s interactions. More data won’t fix poverty by itself, but if governments know and make public exactly what is going on, then they have less scope to ignore it. 

Splitting the roles of CEO and chairman is a trend that needs to continue being encouraged, the FT’s Editorial Board argues. Recent cases of CEOs stepping down from their chairman positions can be seen as a belated move by boards to punish a CEO and solve a short-term crisis rather than a genuine belief in the need for better governance. After all, the two roles are fundamentally different: a chief executive’s role should be the day-to-day management of a company, and to focus on its strategic and operational needs. Chairmen exist to run the board, to assess management’s performance, oversee remuneration and to plan for succession. In short, they serve as the checks and balances of the company, a safeguard mechanism. A chief executive who is also chairman risks falling into the trap of being able to mark his or her own homework.

Cartoon source: The Times

Did you know?

For a brief period in 1817, Venezuela invaded and occupied part of Florida, and the General in charge of the Venezuelans was a Scotsman named Gregor McGregor. Upon returning to Venezuela, McGregor was awarded full military honours and his remains now rest in Caracas Cathedral.  

Parliamentary highlights


House of Commons Oral questions Transport (including Topical Questions) General debate Spending on children’s services Adjournment Governance of Blackpool Hospitals NHS Foundation Trust – Gordon Marsden House of Lords Oral questions Encouraging more people to travel by bus - Baroness Randerson Improving access to palliative care, rehabilitation and psychosocial care for people living with a brain tumour - Baroness Wheeler Eradicating polio in Pakistan and Afghanistan - Baroness Sheehan Situation in Syria and Iraq following Turkey’s invasion of Syria - Lord McConnell of Glenscorrodale Debate Neighbourhood services provided by district councils and other local authorities - Lord Greaves Short debate Situation in Syria and Iraq following Turkey’s invasion - Lord McConnell of Glenscorrodale Debate Recent political unrest in Hong Kong and calls to offer residents of Hong Kong citizenship in another country - Lord Alton of Liverpool

Scottish Parliament No business scheduled.


House of Commons No business scheduled.

House of Lords No business scheduled.

Scottish Parliament No business scheduled.