Brexit is not Brexit?

Much to the surprise of legal experts, the government and, presumably, to those who voted to leave the European Union, Brexit is now once again in doubt. The High Court has declared that the Government cannot trigger Article 50 without a parliamentary vote. The Government will appeal, of course, but sterling is already higher on … Continue reading “Brexit is not Brexit?”

Has China borrowed too much?

The worriers are back warning us that China has borrowed too much. If China was assessed by the same standards as the advanced world, they would be taking a different view. In China, state debt is only around 40% of GDP, compared to six times that amount in neighbouring Japan. The hostile commentators look at … Continue reading “Has China borrowed too much?”

The 3 Rs of India: reforms, RBI and (US) rate hikes

It’s been a really busy quarter for reform hasn’t it? Reforms in India are like buses: none appears for ages and then several arrive at the same time! Well that’s not quite true because change was taking place but it was of the incremental, under-the-radar sort. That’s one reason why India jumped 16 places in … Continue reading “The 3 Rs of India: reforms, RBI and (US) rate hikes”

How the stockmarket returned 81% without moving

The FTSE 100’s record high barely beats the level of 1999, yet investors have been richly rewarded, highlighting the power of dividends. Reinvesting dividends is one of the most powerful tools available to an investor to boost returns over time. If you had invested £100 on 30th December 1999 in the FTSE 100, the capital … Continue reading “How the stockmarket returned 81% without moving”

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”