Spain’s troubles will not derail Eurozone growth

Political risk stalks the Eurozone. The imposition of budget rules from the centre makes domestic politics in many of the zone’s countries difficult. Many of the countries have proportional systems which make majority governments a bit less likely anyway. The unpopularity of austerity policies to comply with Eurozone budget rules has aided in many countries … Continue reading “Spain’s troubles will not derail Eurozone growth”

The rise of China’s technology giants

Baidu, Alibaba and Tencent have rewarded investors’ faith in them. But how have they come to dominate the online economy in China?  When little-known Chinese online gaming and messaging company Tencent decided to list in Hong Kong back in June 2004, its shares were offered at HK$ 3.70 apiece. Fast-forward 13 years to the present … Continue reading “The rise of China’s technology giants”

With the German election over, it’s time to focus on Europe’s growth opportunities

As expected, Angela Merkel has emerged as the victor in the German elections with her centre-right CDU/CSU bloc winning 33% of Sunday’s vote. The centre-left SPD took 20.5% and has said it will go into opposition. The dominant parties in Germany remain pro-EU although the far-right AfD won a higher-than-expected 12.6% of the vote. Negotiations … Continue reading “With the German election over, it’s time to focus on Europe’s growth opportunities”

Draghi stalls for time on QE details

The European Central Bank’s (ECB) Governing Council decided to keep interest rates unchanged at their meeting on 7th September.  Importantly, it did not provide any details on the future of its quantitative easing (QE) programme, which is due to end in December. The ECB has typically announced changes in its QE programme three months ahead … Continue reading “Draghi stalls for time on QE details”

Economic effects of Hurricane Harvey

Hurricane Harvey was a tragedy. It also has the potential to have a considerable economic impact on both the economy of Texas and on the broader US economy. There are also material implications for both commodities and insurance markets. Economic Impact Early estimates put property damage at between $30bn and $100bn (0.2%-0.5% of GDP). For … Continue reading “Economic effects of Hurricane Harvey”

Mr Draghi worries about growth

ECB President Mario Draghi brought a surfeit of pessimism to the Jackson Hole meeting of central bankers. He argued that the 2% trend rate of growth for the Organisation for Economic Co-operation and Development (OECD) rich countries prior to the banking crash of 2008 has now halved to a trend rate of around just 1%. … Continue reading “Mr Draghi worries about growth”

How to invest in times of political change

The last few years have thrown up a series of political surprises. Rank outsiders overturning the odds have become so normal that equity markets have learnt to brace for impact and as a result, those impacts have become more muted. Political leaders and commentators appear to have accepted that old rules may not hold even … Continue reading “How to invest in times of political change”

When smooth waters cause ripples

It is proving to be a healthy quarter of results for US banks and the outlook is fine, regardless of what might or might not happen about regulation. The banks have decent economic growth to thank for much of their own health. Higher interest rates have been good for bank lending and net interest margins … Continue reading “When smooth waters cause ripples”

UK GDP growth remains sluggish

Latest figures from the Office for National Statistics show the UK economy saw a small pick-up in GDP growth, but the overall environment remains sluggish. The preliminary estimate shows second quarter GDP growth at 0.3% compared to 0.2% in the first quarter, and matching consensus expectations. To put the recent growth figures into context, the … Continue reading “UK GDP growth remains sluggish”

Could politics structurally alter the economic backdrop?

With 5 July having marked ten years since the Bank of England (BoE) last raised UK interest rates, we assess the state of the economy and its prospects in light of recent political developments. Although the UK economy has shown resilience since last year’s Brexit referendum, its growth rate decelerated in the first quarter of … Continue reading “Could politics structurally alter the economic backdrop?”

New Dawn for India’s Solar Dreams

India isn’t a country you would associate with environmental stewardship. The Ganges River, an object of veneration for Hindus, is famously polluted; the country hosts 13 of the world’s 20 most polluted cities, according to the World Health Organisation; last year you could even see the smog hanging over New Delhi from outer space. Indeed, … Continue reading “New Dawn for India’s Solar Dreams”

Chinese growth beats forecasts but looks set to slow

Chinese growth once again surpassed expectations in the second quarter, growing 6.9% year-on-year (y/y), unchanged from the first quarter. This should ease fears over the ongoing credit tightening in China, though we still expect a growth impact to come through in the second half of this year. Manufacturing growth accelerates A key contributor to the … Continue reading “Chinese growth beats forecasts but looks set to slow”

Global liquidity and emerging markets

Emerging markets have benefited from an extremely accommodative environment but global liquidity conditions are becoming less easy than they used to be. Today we find ourselves in a world where central banks are reviewing their unconventional stimulus measures. The European Central Bank (ECB) is discussing tapering quantitative easing (QE) while the Federal Reserve (Fed) is … Continue reading “Global liquidity and emerging markets”

Why we are still optimistic

When we sat down this week to review world markets and world economies the surprising thing was how few surprises there have been so far this year. We expected the euro to survive its brushes with mortality in the Dutch and French elections. It has done so. We like many have forecast reasonable growth of … Continue reading “Why we are still optimistic”

Consumers under pressure as UK inflation continues to rise

More bad news for UK households. The annual rate of consumer price index (CPI) inflation rose from 2.3% in March to 2.7% in April – higher than consensus estimates of 2.6%. Meanwhile, the retail price index (RPI) measure of inflation jumped from 3.1% to 3.5% over the same period, also slightly higher than consensus expectations. … Continue reading “Consumers under pressure as UK inflation continues to rise”