Trade and banking matters hit China

The Chinese economy is one of the two giant economies in the global market. We have got used to relying on China to produce growth of more than 6%, and to supply a wide range of manufactured items at attractive prices. The combined effects of a huge expansion of Chinese manufacturing capacity, and the digital … Continue reading “Trade and banking matters hit China”

Will Trump policy hasten the collapse of the dollar?

The world’s acceptance of the dollar as its reserve currency has been positive for Americans. But with Donald Trump’s America First policy, will the world move away from the greenback. When world leaders laughed at Donald Trump’s comments in his address to the United Nations last week, it was an insight into the new world … Continue reading “Will Trump policy hasten the collapse of the dollar?”

Europe’s struggle to break free

At the start of 2018, it looked likely that interest rates could start to rise across Europe, signalling the end of the necessary post-crisis readjustment in the financial sector. However, as is often the case, the themes that drive markets at the start of the year can often be forgotten by the end. As 2018 … Continue reading “Europe’s struggle to break free”

How much damage will the trade war do?

Trade wars are not good news. Mr Trump’s imposition of tariffs on another $200bn of Chinese exports helped drag eastern markets down ahead of the event. Forecasters and pundits fear that the tariffs will curb exports and activity in Chinese factories, push up the price level a little in the US and adversely affect the … Continue reading “How much damage will the trade war do?”

Trade wars step up, more to come

The US has announced tariffs on another $200 billion of imports from China, citing ongoing concerns over the theft of technology and forced transfer of intellectual property. The tariffs take effect next week and are initially set at 10% rising to 25% from 1 January next year. China has yet to respond, but the White … Continue reading “Trade wars step up, more to come”

The Only Game in Town

The US stockmarkets were the only game in town in August. US stockmarkets provided the only positives in August posting another month of strong gains due to robust economic news-flow.  However, all other major global regions showed negative returns, with geopolitical issues and trade war concerns weighing on investor sentiment. The overall result was a … Continue reading “The Only Game in Town”

Hubris and Nemesis: insights into the financial crisis

Ten years ago, the demise of Lehman Brothers marked the height of the financial crisis. At the time, I was an economist at one of the UK’s largest financial institutions. Working there gave me abundant insights into the psychological biases at play, both in that institution and in the companies that it supported. Many of … Continue reading “Hubris and Nemesis: insights into the financial crisis”

Growth to slow as trade wars escalate

As a deeper and more prolonged trade war is anticipated between the US and China, we have downgraded our global growth expectations and forecast slower growth in both 2018 and 2019. Much of the slowdown can be attributed to the effect of trade wars. Europe and Japan disappoint Two of the world’s most export-oriented economies, … Continue reading “Growth to slow as trade wars escalate”

Doom Loop

The most likely candidate for the next ‘Lehman moment’ is in Europe. In some ways the regulatory response that followed in the years after the collapse of Lehman Brothers has been a success. The days of racy balance sheets chasing outsized profits on wafer thin capital are largely over; replaced by a mantra of prudence … Continue reading “Doom Loop”

Russian influence on Western markets

The Russian stock market remains cheap by Western standards, with people applying a Russian discount for the political risks. The market is dominated by the large oil and gas enterprises including Rosneft, Lukoil, Gazprom and Surgutneftegas, and has done well since 2014. Much of the gain has come from the rise in energy prices increasing … Continue reading “Russian influence on Western markets”

Trade wars should not derail growth

Markets worry about a trade war, and relax when they think it is about to be settled. Mr Trump’s attempts to negotiate new trading terms are often called a war but it’s actually a hard negotiation. The President threatens or imposes higher tariffs with a view to getting the other side to propose lower ones … Continue reading “Trade wars should not derail growth”

How long will the bull market last? Four areas to watch…

The global economy’s ongoing expansion continues to underpin the current equity bull market, which is already one of the longest-running in history. We do not expect this dynamic to change in the short term, but there are shifts occurring within the economic backdrop which warrant monitoring for signs that the investment environment may be beginning … Continue reading “How long will the bull market last? Four areas to watch…”

The growing role of China and India in emerging market bonds

Diversification across asset classes has become an essential part of investing for the long term. Investors are increasingly looking further afield to deepen their portfolio diversification and lower total risk as they seek attractive returns. The EMD asset class will continue to see strong growth and we believe that China and India will become increasingly … Continue reading “The growing role of China and India in emerging market bonds”

Commercial property gloom is unjustified

People involved in assessing the value of UK commercial property became very gloomy after the Brexit vote. They often marked valuations sharply lower, by 10% to 15%, only to discover there were plenty of buyers at new levels and no decent stock to sell. They argued there would be less space required, especially in central … Continue reading “Commercial property gloom is unjustified”

Walking on sunshine

Some key factors that have influenced investment markets in recent weeks are discussed below. A positive month for stockmarket investors. Having seen signs of investor nervousness in June, last month saw investors regain their appetite for risk, and it proved to be a sunny climate (matching the weather) for most global stockmarkets. The overall result … Continue reading “Walking on sunshine”