Treasuring trade

Global trade is good for everyone but it’s taken a back seat in the past year. Can we look forward to its renaissance in 2021 and beyond? One of the few topics on which economists agree is the benefits of global trade. Among the first lessons taught to economics students is the Ricardian theory of … Continue reading “Treasuring trade”

Biden presidency could trigger global reallocation to Asia

Less confrontational style likely to lower headline risk and may drive global investors to refocus on the fundamental strengths of Asia’s economies and financial markets. Asian financial markets could reap the benefits if US president-elect Joe Biden proves to be more conventional than his predecessor in the White House, potentially triggering a reallocation of global … Continue reading “Biden presidency could trigger global reallocation to Asia”

The COVID crisis – from risk to opportunity

As recessions go, Covid was an unusually deep one, with many advanced and emerging economies contracting by well over 10% from peak to trough and a few by closer to 20%. However, it was also unusually brief, with the period of contraction lasting for only 1-3 months in most countries, as well as atypically strong; … Continue reading “The COVID crisis – from risk to opportunity”

Back on the Brexit rollercoaster: buckle up for a bumpy ride

What’s happening with Brexit? The UK and European Union (EU) resumed Brexit negotiations over the summer but made limited progress. The political drama and posturing that accompanied the proceedings look certain to persist in the coming weeks. It appears the UK intends proposing domestic laws to weaken its Withdrawal Agreement commitments on the border between … Continue reading “Back on the Brexit rollercoaster: buckle up for a bumpy ride”

A deepening divide: emerging markets and the second-quarter earnings season

Emerging markets (EMs) are often discussed as if they were somehow homogenous. That, however, is misleading. The differences between the individual markets included in EM indices are profound. The Covid-19 crisis has exposed these fundamental differences – especially those between emerging Asian economies and other parts of the developing world. And EM companies’ second-quarter earnings … Continue reading “A deepening divide: emerging markets and the second-quarter earnings season”

Brazil: will this emerging market ever emerge?

Will Brazil be an emerging market that never quite emerges? In the 2000s, the Latin American giant was making impressive progress in converging with developed economies. But since the global financial crisis of 2008, it has surrendered most of these gains. Today, the Covid-19 pandemic is hitting the country hard, threatening not only the health … Continue reading “Brazil: will this emerging market ever emerge?”

Five key investor questions on China answered

Amid the Covid-19 pandemic, our team considers the relative prospects for China’s economic recovery and stock market resurgence. What the pandemic has highlighted is large differences in state capacity to manage this crisis. Will China experience a ‘V-shaped’ economic recovery? We are still at the beginning of an enormous economic and social repair job. Governments … Continue reading “Five key investor questions on China answered”

The end of the beginning, not the beginning of the end

It is becoming clear that the global recovery from the COVID-19 recession began in May. Widespread, albeit still incomplete, success in slowing the spread of the virus has prompted most governments to begin easing lockdowns over recent weeks, following China’s earlier lead. That has led to broad-based improvements in business and consumer confidence, alternative indicators … Continue reading “The end of the beginning, not the beginning of the end”

Asia after the storm

The world has been battered by the coronavirus pandemic this year. Most economic activity was suspended as many of us spent our days confined to our homes. The Asia Pacific region will not escape unscathed. Decades of globalisation ensures that we are all in this together, regardless of where one lives, and whether one likes … Continue reading “Asia after the storm”

Where to next for the Eurozone

Will the Coronavirus battle trigger a Eurozone war? The economic and health impacts of coronavirus have not been distributed equally across the Eurozone. In particular, peripheral countries such as Italy have been hit hardest in human and economic terms. This has reopened old fault lines between member states about a shared fiscal policy to offset … Continue reading “Where to next for the Eurozone”

The hunt for quality and resilience

The enormous economic shock resulting from the pandemic will exacerbate or accelerate the existing problems and imbalances facing many companies and countries. For investors, an even more granular approach will be required when choosing between winners and losers. In this environment, ‘quality’ and ‘resilience’ are likely to become even more important investment themes, especially against … Continue reading “The hunt for quality and resilience”

US profits: will they bounce back as quickly as investors think?

US earnings season is always a spectacle and this time around is no different. Well, no different but for one exceptional factor: Covid-19, and its effects on company profits. The businesses that make up the S&P 500 Index have started to tell us how they performed from January to March, a period of unprecedented operating … Continue reading “US profits: will they bounce back as quickly as investors think?”

Keep calm and carry on

An unexpected global pandemic has triggered the third bear market of the 21st century. At the start of the year, equity analysts had priced in profits growth of 5-10% a year, now they are downgrading their profits estimates by 5-10% a week. One of the deepest economic recessions since the 1930s will expose some well-known … Continue reading “Keep calm and carry on”

The importance of forecasting humility

It is natural to want to rush to judgement about the long-term changes the coronavirus pandemic will bring, whether in an attempt to get ahead of the game or simply impose some order amidst the chaos. But as understandable as that impulse is, it can also be dangerous, allowing highly speculative claims to circulate and … Continue reading “The importance of forecasting humility”

China standing out among emerging markets

Like those almost everywhere else, emerging markets (EMs) suffered a coronavirus shock in March. Having plunged by nearly a third in the early part of the month, however, EM share prices partly recovered towards the end. Promises of large-scale monetary and fiscal stimulus in the US arrested the declines, but EM stocks still had a … Continue reading “China standing out among emerging markets”