Why policy reform is the key to China’s demographic challenge

It is well known that China faces an ageing problem. The popular narrative has it that China surged up the growth league tables on the back of its giant population, reaping years of demographic dividends to become the world’s second largest economy. In this narrative, China’s population is now ageing and so the growth story … Continue reading “Why policy reform is the key to China’s demographic challenge”

Will the US-China trade deal live up to expectations?

President Trump usually encourages high expectations of what he and the US might achieve. A deal-maker by instinct and long business practice, he has made much of his ability to get the country a better deal. These claims are now on trial as we approach the end game of the US-China trade talks. The President … Continue reading “Will the US-China trade deal live up to expectations?”

Germany will pay the price for Italy’s provocation of Trump

The Italians have joined China’s controversial “New Silk Road” programme, a move that is likely to stoke the ire of Washington. At the weekend, Italian populists handed Donald Trump yet another reason to turn his trade guns on Europe, increasing the risk of a German recession. At a signing ceremony in Rome, Chinese President Xi … Continue reading “Germany will pay the price for Italy’s provocation of Trump”

Car crash in the motor industry?

Last year was not a good year for the world motor industry. Passenger car sales fell by 13% in the USA, by 9% in the UK, by 4% in China, by 3% in France and by 0.2% in Germany. In the USA higher interest rates reduced people’s willingness to take out car loans. In China … Continue reading “Car crash in the motor industry?”

Will the world authorities do enough to stimulate their economies?

Markets signalled the slowdown now underway in industrial output and investment with a sharp sell-off at the end of last year. They challenged the Federal Reserve in particular to ease its tough stance, which it duly did as 2019 dawned. US policy is to spend more and tax less, offering some budget boost to the … Continue reading “Will the world authorities do enough to stimulate their economies?”

No time to be pig-headed

The trade war is dominating headlines and shaking investor confidence in China. But as we enter Year of the Pig, it’s worth remembering this is a long-term growth story. No sooner have the Christmas decorations come down than new ones have gone up to mark the Lunar New Year, which starts on February 5. It’s … Continue reading “No time to be pig-headed”

Trade: Will Trump rediscover the art of the deal?

The markets have two problems with US President Trump’s approach to the trade talks. The first is he is so unpredictable that it makes it very difficult for commentators and forecasters to come up with a well-based vision of what the future holds. The second is there is a nagging worry that the US China … Continue reading “Trade: Will Trump rediscover the art of the deal?”

Why Trump and China both want to end the trade war

Optimism that the trade war that has ravaged global markets could be resolved soon is mounting. China’s Ministry of Commerce said that last week’s discussions with US representatives were extensive and had established a foundation for the resolution of each country’s concerns. In fact, it appears that things are moving into place for Donald Trump … Continue reading “Why Trump and China both want to end the trade war”

How trade wars have affected emerging market returns

The MSCI Emerging Markets Index, a measure of emerging markets (EM) equities, was down 14.3% in 2018, but this masked a considerable dispersion of returns, particularly in US dollar terms. Turkey was the year’s worst performer, thanks to a collapse in the lira, with equities losing investors 57.6% in dollar terms. The best performing major … Continue reading “How trade wars have affected emerging market returns”

China tries to balance its economy

The Chinese bear market in shares has lasted since the peaks reached in the summer of 2015. The index of share prices for the Shanghai market has halved since June 2015. Then excessive exuberance tempted many domestic buyers into the stock market. A substantial credit expansion allowed people to buy shares on borrowed money. When … Continue reading “China tries to balance its economy”

China and Taiwan tensions build

President Xi Jinping’s statement that Taiwan is properly part of China and will be fully integrated one day is not new policy. Nonetheless it seemed to upset the Hong Kong market, and made investors wonder whether there was to be a new tougher phase in China’s relations with the very successful island economy of Taiwan. … Continue reading “China and Taiwan tensions build”

2018: A year to forget

2018 will be a year that many investors would rather forget. A lucky few will still be looking for an overall gain for the year, but the past few months have proved extremely uncomfortable. What have been the highs and lows of the year?  Research by Willis Owen shows that eight sectors delivered a positive … Continue reading “2018: A year to forget”

Trade deal leaves considerable uncertainty

President Trump decided to sit down with President Xi after all at the G20 Summit in Argentina. He had blown hot and cold about whether it was worthwhile to do so, and had threatened to carry on with his increases in tariffs on Chinese goods ahead of the meeting. Markets should be growing used to … Continue reading “Trade deal leaves considerable uncertainty”