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 Trump makes the case for emerging markets

Donald Trump’s first weeks as US president are turning out to be just as controversial as his bruising election campaign. A flurry of executive orders on border controls, trade and healthcare has dominated headlines, causing dismay and galvanising opposition. The drama unfolding on a daily basis makes the modest comeback that developing markets have been … Continue reading “Why Trump makes the case for emerging markets”

What happens when rates go up?

A look at the implications of rising interest rates in the US. The US Federal Reserve has begun the painstaking process of raising interest rates, up to 0.5% to 0.75% in December, and has signalled 2017 will contain more of the same. We believe that strong fundamentals support the idea that the US stands to … Continue reading “What happens when rates go up?”

Weak data prompts aggressive Brazilian central bank cut

Preceded by lower-than-expected inflation earlier in the day, the decision by the Brazilian central bank to cut interest rates by 75 basis points (bps) instead of the 50 bps forecast was a surprise that had been a while in the making. Weak data Activity has been consistently weaker than both the market and central bank … Continue reading “Weak data prompts aggressive Brazilian central bank cut”

Going global – and back again

Every year has its upsets, but 2016 seems to have thrown up more than most. With the Brexit referendum, with the election of US President Trump, and with the continued rise of insurgent populist movements elsewhere in the developed world, it feels as though we are heading for an economic and political crunch point. As … Continue reading “Going global – and back again”

Can the emerging markets revival continue?

A panel of experts from Schroders reflect on the revival seen in emerging markets this year, and discuss whether it is set to continue in 2017 in the wake of the recent US presidential election result. Will the US election result hamper the emerging markets revival? Given the uncertainty over US policy under President Trump, … Continue reading “Can the emerging markets revival continue?”

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”

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”

The Chinese liquidity trap

It is not just in developed markets that corporates are finding little productive use for easy money. Monetary easing in China, too, is having little apparent impact on the real economy. The M1-M21 gap in China, shown in the chart below, has historically functioned well as an indicator of GDP growth. Typically, if M1 growth … Continue reading “The Chinese liquidity trap”

Focus turns to reforms after Brazil votes to impeach Rousseff

The impeachment of Dilma Rousseff had been widely expected. The prospects for Brazilian assets now rest on economic fundamentals and much-needed reforms. With a greater-than-expected majority, Brazil’s Senate voted to impeach President Dilma Rousseff, removing her from office after her suspension in May. Rousseff is replaced as president by Michel Temer, who has been acting … Continue reading “Focus turns to reforms after Brazil votes to impeach Rousseff”

Emerging markets outperform in August

Emerging Markets Briefing – Emerging equity markets generally performed better than their developed counterparts during August, led by a strong contribution from China. The Shanghai Composite Index rose by 3.6%. During the month, a plan to connect the Hong Kong and Shenzhen stock exchanges was finally approved in principle. The International Monetary Fund (IMF) expects … Continue reading “Emerging markets outperform in August”