Our October Sinology explores the disconnect between weak market performance in China, and strong macro conditions and corporate earnings. How likely is this to narrow?
Whether or not one believes in the “October Effect,” investors can’t be blamed for giving it credence this year. Worries about trade, the Federal Reserve and global growth roiled the markets as the fourth quarter began. Even U.S. equities—which had roared through the third quarter as investors focused on positive economic data—succumbed to the selloff that gripped risk assets.
Di Zhou and Jim Gassman are co-managers of the Thornburg Better World International Fund (TBWIX), a global ESG fund. Since its inception on 9/30/15, through 9/30/18, the fund has earned an annualized rate of return of 10.96%, outperforming its benchmark, the MSCI ACWI Ex-US USD index, by 117 basis points. As of 9/30/18, the fund has been rated five stars by Morningstar. Stop by to see us at booth #388 (near the Bear & Bull Pub) in the exhibit hall, where you’ll have a chance to talk with our product representatives and pick up our latest features in the Wall Street Transcript and Value Investor Insight.
Market updates from across the region.
Investors who view market opportunities exclusively through the lens of recent strong economic performance risk misreading a pivotal event. The tide of liquidity is turning and will bring asset prices down with it.
To refresh, the new playbook refers to strategies that we believe can prosper in the environment we expect of higher inflation and interest rates, dollar weakness and increased volatility.
In this article we put our optimization machine framework to the test. Specifically, we make predictions about which portfolio methods are theoretically optimal based on what we’ve learned about observed historical relationships between risk and return. Then we test these predictions by running simulations on several datasets.
Asset price inflation (check). Financed by debt growth (check). We’ve spent the last three weeks reviewing Ray Dalio’s A Template for Understanding Big Debt Crises. I hope you found the insights as helpful as I did.
What do a Nobel Prize, oil prices and employee compensation have in common? Change. The Nobel committee tipped its hat to the importance of recognizing climate change with its prize for Economic Sciences. But changes in oil’s global role and compensation vs. wages are also on our minds
India's growth rate accelerated to 8.2% in the second quarter of 2018 as the shocks from demonetization and the imposition of the Goods and Services Tax (GST) wore off, supported by inventory restocking and a low base of comparison. The principal drivers of growth were government and private spending.
Following a substantial run-up in 2017, China's stock markets experienced notable volatility in recent quarters. The MSCI China Index was down roughly -9% year to date measured in U.S. dollars as of September 30, 2018, while China's mainland, domestic A-shares were down nearly -20% measured in U.S. dollars for the same period.
Factor investing, an investment approach which targets specific stock characteristics such as value or momentum, is becoming a stronghold of investor portfolios.
Growth and value stocks are often seen as opposing one another—but we believe they can be complementary within an equity portfolio.
With an unexpected hit on its hands, perhaps Hollywood will use more films like “Crazy Rich Asians” to illustrate key concepts about a region that is the biggest economic success story of the last several decades. There are many more stories about that story to be told.
The U.S. dollar’s rally, underpinned by strong U.S. growth expectations and widening interest rate differentials versus other economies, has key driver of tighter global financial conditions. The dollar is a central transmission channel for financial conditions, as well as an important measure of risk appetite.
Trade deficits or surpluses aren’t bad. Nor are they good. They are a natural characteristic of post-barter economies that have achieved division of labor… a sign of success, in other words. For certain countries, there are times when trade deficits simply don’t make a difference. And then there are times when they can be devastating. It all depends on the current account surplus, a concept we will deal with below, and/or whether the country’s currency has reserve status.
According to a recent Cornerstone Macro report, the three most influential macro trends this year have been 1) the strengthening U.S. dollar, 2) the flattening yield curve and 3) slowing global manufacturing expansion.
Emerging markets continue to decouple from the U.S. market, making them look attractive as a value play—particularly distressed Chinese equities. Below I’ll share with you two big reasons why I think China is well-positioned to outperform over the long term.
The IMF is the body best suited to serve as a trusted adviser and an effective conductor of the global policy orchestra. If it is to fulfill that role, however, it must strengthen its credibility as a responsive and effective leader. That means listening to its members, then guiding them toward more harmonious policies.
Matthews Asia CIO Robert Horrocks says China's leadership on free trade is an important reason to invest in the growth of Asia.
What impacts could escalating trade tensions and rising U.S. interest rates have on global markets and economies in the months ahead? See what our strategists’ views are for the fourth quarter of 2018 and beyond.
Asia’s entrepreneurs have capital, customers and conviction. Learn about the opportunity for global investors.
A number of market headwinds—including trade tensions, rising interest rates and a general fear the long-running US economic expansion may be facing fatigue—have cast a shadow over the markets in the first half of the year.
Without Googling, try to guess who said the following quote: “If everybody indexed, the only word you could use is chaos, catastrophe. The markets would fail.” Give up?
Capturing a diverse range of business opportunities and return drivers, Asia’s small companies offer attractive opportunities for long-term growth.
This week, I had the privilege to attend the Cornerstone Macro Conference in New York. Langone’s presentation, moderated by Omega Advisers CEO Lee Cooperman, stood out as one of the highlights.
Matthews Asia CIO Robert Horrocks says Asia's markets have rebounded because of reasonable valuations.
We asked hundreds of equity and fixed income managers how they are integrating ESG factors within their investment process. Which countries are lagging their peers? Does AUM correlate with ESG integration? Today, we share our findings.
If you listen to the media, you probably think the “middle class” is declining rapidly, not just here but around the world. It’s true, the middle class is declining in America, but not for the reasons the media would have us believe. It’s actually a good thing, and I’ll explain why as we go along today.
60% allocated to equities and 40% to bonds has been an extraordinarily successful investment strategy for most of the past 40 years, but I believe the show is now largely over. In this month's Absolute Return Letter, I focus on the 40%, and I argue that, although I don't expect 10-year government bonds to deliver more than 0-2% annual inflation-adjusted returns in the years to come, there are indeed things you can do to earn higher returns.
It was the best of times, it was the worst of times. A tale of two world leaders, U.S. president Donald Trump and China president Xi Jinping—both of whose countries have among the world’s best economies right now. But whereas Xi is playing Santa Claus to the rest of the world, doling out loans to finance-starved countries, Trump is playing Scrooge, waging an economic war with Canada, the European Union, China and others.
Change will be today’s topic. Below I’m reproducing part of a letter I originally wrote in December 2007 and have referred to several times. It is the single most-read letter I have written and the most commented-on, too. I consider it, in some ways, my most important letter. If you’ve read it before, you should read it again. I have updated it a little bit, but the principles are just as timeless as ever. And for the time conscious, we have shortened it a bit and at the end, I try to apply those principles to present economic times.
We expect an acceleration of strategic investments into onshore China bonds as these securities join emerging market and global bond indexes.
Last week, we covered Turkey’s geopolitics and history. This week, we complete the series, starting with a discussion on Turkey’s economy with a focus on the changes brought by the Justice and Development Party (AKP), led by President Erdogan. We also examine how foreign debt affects Turkey’s economy and financial system, highlight the impact of the 2016 coup and analyze the causes of the current crisis in Turkey. From there, we discuss the debt problem and Turkey’s options for resolving the crisis. As always, we conclude with market ramifications.
Trade tensions have spooked investors in recent months, including those in India’s stock market. Franklin Templeton Emerging Markets Equity’s Sukumar Rajah weighs in on the positive economic fundamentals he and the team see, and why they think India’s equity market should be able to weather recent challenges.
Gold prices moved up close to 2 percent today, and gold stocks climbed even higher following comments from Federal Reserve Chair Jerome Powell. During his speech at the Jackson Hole Economic Symposium, Powell reiterated the central bank’s commitment to raise interest rates gradually while the U.S. economy continues its strong performance.
July marked the first month of the calendar year where emerging markets posted positive performance overall, with frontier markets leading the way.
Turkey's crisis may offer investors the opportunity to build positions in ASEAN countries and India.
Turkey has become a major topic of interest. A 2017 constitutional referendum gave the president sweeping powers, and President Erdogan won re-election in June 2018. Since then, an economic crisis has developed, with falling financial asset prices and a sharp currency decline.
US equities have returned to their January all-time highs. Several new momentum studies suggest that equities are likely to gain more into year-end. Despite the gains over the past 5 months, investor sentiment is not frothy. US equities now have a topping pattern in place: the momentum high in January has been followed a price high in August.
Dispute could be a setback for productivity, affecting consumers globally.
The Trump administration withdrew from the Iranian nuclear deal and plans to implement sanctions on the country in two phases. In Part I, we introduced this topic and covered the first two potential responses from Iran, which were restarting the nuclear program and projecting power. Last week, we covered the threat to the Strait of Hormuz.
Every summer for the past several decades, I have been organizing lunches for serious investors who spend at least part of their vacation time in eastern Long Island. Those attending include hedge fund wizards, real estate titans, corporate chiefs, thoughtful academics and a few others.
As Russ notes, in a world with few bargains, one stands out: Asia.
Emerging markets have struggled in the first half of this year amid a storm of uncertainties. Franklin Templeton Emerging Markets Equity’s Chetan Sehgal examines issues that have acted as clouds on the asset class—including a stronger US dollar and trade skirmishes...
Trump withdrew from the nuclear deal with Iran in May. Although the rest of the signatories remain committed to the original agreement, the U.S. plans to implement sanctions on Iran in two phases.
The number of publicly listed companies in the U.S. has fallen steadily since 1997. More companies have delisted, in fact, than gone public in every year of the past 20 years except one, 2013. Put another way, the pool is getting smaller even while the population and economy are expanding.
As Russ explains, dismal performance of emerging markets this year has make them look like a bargain again.
The Brexit clock is ticking as the United Kingdom’s departure from the European Union (EU) is set to take place in March 2019. But is the UK ready to leave? And is there still a chance it won’t?
Most commodities have suffered lately with the backdrop of tariffs and China’s devaluation. But some have fared worse than others, and there is information content to the relative move in commodities. While copper catches many of the headlines (i.e. Dr. Copper, the metal with a Ph.D in economics) the most significant decline has occurred in lumber.
