The Week Ahead
Zolani Nkomo.
Analytic Precision | Strategic Insights | Unparalleled Coverage in over 200 Markets, I support key decision makers with relevant data and insights in order to help them uncover opportunities in African markets.
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The recent UN-brokered ceasefire in Yemen between the Iran-backed Houthis and the domestic government represents a key breakthrough in the decade-long conflict and could sustainably reduce political risk in the country. However, there are considerable risks to the deal’s enforcement and the broader roadmap for peace stemming from the Israel-Hamas war. Against the backdrop of that war, Houthis have been stepping up attacks in the Bab Al Mandab strait, bringing them into conflict with the US-led coalition to protect shipping in the Red Sea. Any direct strikes on the Houthis could boost their domestic popularity, given support for the Palestinian among Yemenis, potentially emboldening them to resume attacks to take more land in Yemen, including the oil-rich Marib. Even after a ceasefire is implemented, we see risks to its sustainability and to the ultimate end of the war due to the deep mistrust between parties involved and the military capabilities of the Houthis.
With the Israel-Hamas war entering its fourth month , Israel has yet to achieve its stated objectives to neutralise Hamas and secure the release of hostages. Tensions have continued to build up in the West Bank, amid more frequent attacks by the Israeli military and the rising popularity of Hamas. We hold to our view that the war will reduce in intensity over the coming months, with the war ultimately ending through diplomatic efforts. However, as long as Israeli forces are active inside Gaza, the fighting along the Lebanese border, assaults on US interests in Iraq and Syria and security threats in the Red Sea will continue.
Pakistan’s 2024 general election, which we expect will be held on 8 February, will likely result in a victory for the Pakistan Muslim League - Nawaz (PML-N). We expect that former PM Nawaz Sharif will become premier. The PML-N was the senior partner in the government that replaced Imran Khan’s in 2022 and will benefit from an improving economic situation and court rulings banning Khan from contesting as a candidate. Opposition leader Imran Khan’s supporters will almost certainly reject the result and launch protests, but we doubt that these will last long or pose a serious threat to the new government’s authority.
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The Australian government has released its Cyber Security Strategy 2023-2030 (ACS 2030), which aims to improve the country's cyber resiliency. To implement this strategy, the government has developed an action plan including funding for specific initiatives totalling AUD15.5bn (USD10.4bn). This may provide a catalyst for growth in the Australian cybersecurity industry in areas including biometric access and verification; cybersecurity training and recruitment; and, testing, inspection and certification for smart devices. That said, as is typical of the industry, investments will remain exposed to downside regulatory risk, given the often unpredictable nature of government interference.
High User Adoption Rates For MFA Tech Provide Upside Potential Fastest Growing MFA Markets – Average Annual Increase In MFA Adoption, % (2022)
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Source: Cisco Duo Report 2022, BMI
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Japanese Prime Minister Fumio Kishida’s position is looking increasingly precarious in 2024 , and we see a strong possibility that he will lose office. His already steadily declining approval rating touched a new low of 23% in December 2023, as the ruling Liberal Democratic Party (LDP) became embroiled in a political fundraising scandal. If Kishida’s approval rating fails to recover above 30%, he will face overwhelming pressure from the public and the LDP to resign. Several prominent LDP figures - including former defence minister Shigeru Ishiba, LDP Secretary-General Toshimitsu Motegi, and digital transformation minister Taro Kono – are well-positioned to succeed him. However, regardless of who (if anyone) replaces Kishida this year, we expect broad continuity in domestic and foreign policy in 2024.
We believe the housing market downturn in Mainland China will last for years, providing a persistent drag on the country’s economic growth. The market’s growth has been fuelled by speculative demand, but with sentiment souring, it looks increasingly oversupplied. A decline in housing starts over the past four years should see the housing stock start to shrink, but based on current sales volumes it will take around 10 years for the entire stock of unsold pre-built residential units to be absorbed. Meanwhile, still-poor affordability and weak sentiment means serious homebuyers are likely to give the market a wide berth, especially as more developers are likely to face financial difficulty.
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THIS COMMENTARY IS PUBLISHED BY BMI, a Fitch Solutions Company and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data are solely derived from BMI and independent sources. Fitch Ratings analysts do not share data or information with BMI.