Should we worry about Japanese debts?

Investors like to worry. When you’ve got your money at risk it is natural to do so. It is commonplace to read about the very high levels of Japanese state debt, with some querying how much longer it can carry on. Japan has the highest level of state indebtedness of the main economies. Its gross … Continue reading “Should we worry about Japanese debts?”

Infrastructure spending: What’s not to like?

Is it time for an infrastructure push? The International Monetary Fund (IMF) thinks so, and we agree. Public infrastructure investment not only provides a short-term lift to demand; it also helps economies to grow faster without hitting capacity constraints. And to these two benefits, we would add a third: increased infrastructure spending could help relieve … Continue reading “Infrastructure spending: What’s not to like?”

Stable growth for China as long term costs mount

Chinese GDP growth was in line with expectations but is there a slowdown ahead? Chinese third quarter GDP grew 6.7% year-on-year, in line with expectations, and unchanged from the second quarter. A breakdown of the data reveals an acceleration in primary industry and a smaller increase in the tertiary, or services, sector. Manufacturing managed stable … Continue reading “Stable growth for China as long term costs mount”

A tale of two visits

John Redwood, Chairman of the Investment Committee at Pan Asset takes a look at the Indian and Chinese stock markets. On the 20th October the President of China Xi Jinping will arrive in London for a state visit. The guest of the Queen, there will be a grand banquet at Buckingham Palace, and business meetings … Continue reading “A tale of two visits”

US election: uncertain predictions and market risks

What Brexit teaches us about trusting betting exchanges and polls in the run-up to the US election, and some of the market implications of the possible results. Betting exchanges vs polls We learned from the Scottish referendum that betting exchanges were a better predictor of a particular voting outcome than the official polls. The Brexit … Continue reading “US election: uncertain predictions and market risks”

Sterling work…

With sterling having just plunged to a 31-year low against the US dollar, it’s interesting to note some of the similarities between the UK now and back in 1985. We had a female prime minister at the helm (Margaret Thatcher), while rival political factions vied to take control of the UK’s Labour Party (Neil Kinnock … Continue reading “Sterling work…”

Sterling weakness and plenty of money

The UK has been battling down its government deficit for the last seven years.  In the March Budget book they forecast an annual deficit of £55bn for the present year, down from £72 bn this year. They also forecast a falling path for UK state borrowing as a proportion of our GDP, with net debt … Continue reading “Sterling weakness and plenty of money”

How effective is central bank innovation?

The overhaul of the Bank of Japan’s monetary policy framework at its September meeting marks the latest in a long line of innovations made by the world’s major central banks in the years since the financial crisis. No one can rightly accuse central banks of being short on ideas to stimulate their economies and raise … Continue reading “How effective is central bank innovation?”

“Hard Brexit” hint sinks sterling, raises relocation risk

Following Prime Minister Theresa May’s suggestion that the UK is heading for a “hard” Brexit, international companies are now more likely to relocate than risk remaining in the country. After months of speculation as to the timing and direction of the UK’s Brexit negotiations, Prime Minister May not only revealed that she plans to trigger … Continue reading ““Hard Brexit” hint sinks sterling, raises relocation risk”

Monthly Commentary – September 2016

The FTSE World index climbed again in September with a rise of 1.2% in sterling terms. Year to date central banks around the world still appear willing to do what it takes to generate growth, and avoid recession and deflation. Politics remains important; the new government in the UK is now 100 days into its … Continue reading “Monthly Commentary – September 2016”

The falling currency: A welcome adjustment?

It turns out we were in a false reality. No-one believed that Brexit was really going to happen. The response to comments by Theresa May at the Conservative Party conference – and the realisation that Brexit is not only going to happen, but likely to be ‘harder’ than expectation – has been a plunge in … Continue reading “The falling currency: A welcome adjustment?”

Deutsche Bank’s predicament dominates Europe in September

Europe briefing – European markets were overshadowed during September by concerns over the financial health of Germany’s Deutsche Bank, which was hit with a US$14 billion fine by the US Justice Department. Deutsche Bank’s shares lost over 20% of their value during September Inflation remained a headache for ECB policymakers Switzerland was named the world’s … Continue reading “Deutsche Bank’s predicament dominates Europe in September”

Bank of Japan issues Brexit warning

Asia including Japan briefing – During September, Japan’s Foreign Ministry warned the UK that Brexit could result in Japanese firms moving their European headquarters out of the UK. The Bank of Japan maintained its negative interest rate, instigated a new policy of yield control, and reiterated its relatively aggressive policy stance. Looking ahead, further cuts … Continue reading “Bank of Japan issues Brexit warning”

Concerns grow over China’s credit growth

Emerging markets briefing – As a whole, emerging equity markets outperformed developed markets during September. However, concerns appear to be growing over China’s credit-to-GDP gap, which has risen sharply, creating potential problems for the country’s financial sector. The IMF added China’s yuan to its basket of reserve currencies Russia’s key interest rate was cut from … Continue reading “Concerns grow over China’s credit growth”