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Why quality pays in late-cycle periods
February 27, 2019--History suggests that so-called "quality" companies, i.e. those with a high return on equity (or "ROE"), tend to be able to produce market-beating shareholder returns over time.
As this note details, moreover, quality companies have tended to especially outperform in "late-cycle" market periods, as investors have tended to gravitate toward companies with strong balance sheets and durable profitability.
Factor investing and the case for quality
So-called "factor investing" is an increasingly popular rules-based strategy that aims to select companies likely to outperform the broader market over time. Factors are identified corporate characteristics that have tended to be associated with share market outperformance-either over time and/or at least at different stages of the market cycle.
Popular factors include:
Momentum-companies displaying relatively strong share price performance over recent times.
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Source: BetaShares
China's strategy: Growth, alliances, and tech acquisition
February 27, 2019--Despite the pause in the US-China trade war, the US and China are strategic competitors, and will continue to be so for the foreseeable future. China realizes that there is little room to settle long-term disputes and, as a result has shifted towards a strategy that focuses on sustaining growth at any cost, expanding alliances, and advancing its technology.
The truce agreed to by China and the US at the sidelines of the G20 meeting in Buenos Aires does not change the US' ultimate goal to contain China. The reason is straightforward: the US and China have become strategic competitors and will continue to be so for the foreseeable future, leaving little room to settle any long-term disputes.
China's recognition of the structural features of the US-led trade war has also brought about a drastic change in its response to US policy. From tit-for-tat tactics based on retaliatory measures on trade, China has shifted to a three-pronged strategy: sustaining domestic growth at any cost, finding alliances externally, and accelerating China's technological capacity.
First and foremost, China needs to cushion the deceleration in economic growth, especially after deceleration intensified in 2018 following the US-led trade war. So far, 2018 has seen an easing in monetary policy and a half-hearted attempt at a fiscal stimulus, but those have clearly not been enough to stop economic deceleration.
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Source: bruegel.org
Shenzhen's economy surpasses Hong Kong for the first time
February 26, 2019--Hong Kong Q4 GDP growth slows to near 3-year low amid "external pressures"
Shenzhen's economy surpassed that of Hong Kong for the first time in 2018, drawing a line under the former colony's economic malaise as its dynamic rival across the border in mainland China continues to draw the attention of domestic and international investors.
Economic growth in Hong Kong slowed to its lowest in almost three years in the final three months of 2018, the city's finance secretary said in his annual budget on Wednesday, citing "mounting external pressures".
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Source: FT.com
Boosting Financial Protection Against Natural Disasters is Critical for Economies in Central Asia
February 26, 2019--The economies of Central Asia must significantly increase financial protection against natural disasters and consolidate efforts to effectively manage disaster risks, said experts at a Regional Forum on Disaster Risk Financing in Almaty today. Policymakers and disaster risk management experts from five Central Asian countries discussed ways to improve financial protection, including which financing instruments to use, in the context of rising challenges brought about by climate change.
Central Asia is among the world's most disaster-prone regions. Earthquakes, floods, landslides, extreme weather events and other natural disasters occur almost every year across the region.
In the past three decades, natural disasters have affected over 10 million people throughout the region and caused economic losses of almost $2.5 billion.
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Source: World Bank
Deadline delayed
February 25, 2019--Week in Review
It was another positive week for global equities thanks to still reasonably reassuring growth indicators, dovish Fed commentary and ongoing hopes with regard to US-China trade talks. The US S&P 500 Index lifted 0.6%, and broke above its previous key end-week closing high in early November last year (i.e before the December bloodbath).
Equities are broadly enjoying an historically strong recovery after an historically strong slump last year!
With markets attentive to any signs of global slowing, it was notable that all-three key G-3 (US, Japan and Europe) global manufacturing surveys for February came in a bit weaker than expected last week, and in the case of Japan and Europe dropped below 50. America's index was still comfortably above 50. Clearly, China's slowdown and lingering trade tensions have taken their toll. Service sector indices, however, remained much more upbeat. Meanwhile, minutes from the latest Fed meeting again suggested that balance sheet rundown is likely to end later this year and the Committee is still unsure whether it will need to lift interest rates again.
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Source: BetaShares
Coinflex Launches its Physically Delivered Cryptocurrency Futures Exchange
February 22, 2019--According to a recent report, Coinflex has announced the launch of its cryptocurrency futures company based in Hong Kong.
This news is coming right after a report surfaced last month that the physically delivered cryptocurrency futures exchange intends to offer future contracts for bitcoin core (BTC), Ethereum (ETH), and bitcoin cash (BCH), all paired against tether (USDT). The exchange which is based in Hong Kong is owned by a combination of several startups which includes Dragonfly Capital Partners and Trading Technologies International Inc., crypto trader Mike Komaransky.
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Source: coinmarkets.net
FTSE Russell's China Bond Research Report -Q4 2018
February 21, 2019--Growth projections for China's bond market remain strong even as the RMB weakens amid trade tensions
China's bond markets are set to evolve at a rapid pace in 2019-even if fears of prolonged trade tensions between the US and China are dominating headlines.
By some estimates the Asian giant's US$12 trillion bond market is projected to double in size over the next four years to about US$24 trillion; and Chinese Government Bonds are forecast to make up US$4 trillion of that market by the end of 2022.
Australia's Economic Outlook in Six Charts view more Currency Matters
To hedge or not to hedge?
view more SEBI may allow mutual funds & PMS in commodities at March board meet; indices too on cards view more If you are looking for a particuliar article and can not find it, please feel free to contact us
Source: FTSE Russell
February 21, 2019--Economic growth in Australia picked up strongly in the first half of 2018, and the economy made further strides in its adjustment and rebalancing after the end of the mining investment and commodity price boom.
Despite strong employment growth and declining unemployment rates, wage growth was low and underemployment still above its longer-term average. In the absence of wage or other cost pressure, inflation remained below the central bank's 2 to 3 percent target range. After a recent housing boom, a housing market correction is now underway.
Source: IMF
February 20, 2019--Currency, for most investors, has always been a topic that causes consternation.
While many investors recognise the diversification value that international investments can bring, the fact that, by definition, such investments bring with them currency considerations adds an additional element to the decision.
There is no doubt that managing the currency risk that comes with international assets can be a rather complex area. With the growing number of exchange traded products providing investors with easy access to international exposures on the ASX, currency becomes an increasingly important consideration as investors look to create diversified portfolios.
Currency fluctuations can dramatically affect the returns on international investments, both positively and negatively. As an example, should the Australian dollar rise against the USD, any investment returns from a US dollar based investment would be reduced as they are converted back into AUD.
Source: BetaShares
February 20, 2019--SEBI may also give its consent to indices in the commodities market
The Securities and Exchange Board of India (SEBI) may allow mutual funds and portfolio management services (PMS) in the commodities market at its upcoming board meet scheduled for the second week of March.
The markets regulator has almost finalised regulations for their entry as a new participant.
Source: moneycontrol.com
