Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

In January’s ‘Government and Markets’ report, we used the themes in the 2016 GEM overview and China outlooks to introduce our intra-GEM country weightings.We provide more detail on each of these countries in the full version of this report, focusing on the economic, financial and structural governance issues that we believe will be the most important market drivers over the course of this year and beyond.

In January’s ‘Government and Markets’ report, we used the themes in the 2016 GEM overview and China outlooks to introduce our intra-GEM country weightings.We provide more detail on each of these countries in the full version of this report, focusing on the economic, financial and structural governance issues that we believe will be the most important market drivers over the course of this year and beyond.

Governance, Valuations and the Crisis of State Capitalism

Information Technology Consultant

Ishita Jain

Thematic (Sector/Industry)

Amazon.com has recorded one of its best years ever. Many investors are following its success while also wondering if the future will be as bright. Jeff Bezos’s management took steps in the right direction aligning their strategies in the direction of the current. If they continue taking these steps, there is good reason to stay bullish on the company.

Amazon.com has recorded one of its best years ever. Many investors are following its success while also wondering if the future will be as bright. Jeff Bezos’s management took steps in the right direction aligning their strategies in the direction of the current. If they continue taking these steps, there is good reason to stay bullish on the company.

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately starting to play out; although markets currently feel very oversold and could rally sharply over the short term, we believe that there is further downside for EM equities in absolute and relative terms over the remainder of the year.

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately starting to play out; although markets currently feel very oversold and could rally sharply over the short term, we believe that there is further downside for EM equities in absolute and relative terms over the remainder of the year.

Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

Download the Morningstar Fact Sheet : http://corporate.morningstar.com/US/documents/MarketingFactSheets/AboutMorningstarFactsheet.pdf

<ul><li class="p1">Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack from hard discounters and online competition.</li><li class="p1">The prolonged period of slow economic growth has conditioned consumers to be more price sensitive, and the emergence of the e-commerce channel is rapidly changing consumers' shopping behaviours.</li><li class="p2">In our opinion, the strongest antidote to these pressures is a strong brand.</li><li class="p2">In this report, we quantify the power of each company's brand by its ability to take pricing, using a number of metrics, and conclude that while brand strength varies widely across the consumer packaged goods space, beverages and tobacco generally enjoy stronger positions.</li><li class="p2">We also dive deep into cost advantages and show that while some of the large diversified CPG firms may generate economies of scope, economies of scale are more prevalent in industries with a homogeneous manufacturing process.</li></ul>Lead Analysts: Adam Fleck, CFA; Philip Gorham, CFA, FRM; R.J. Hottovy, CFA; Erin Lash, CFA; Ken Perkins, CFAFull report below the fold...&nbsp;

Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack from hard discounters and online competition.The prolonged period of slow economic growth has conditioned consumers to be more price sensitive, and the emergence of the e-commerce channel is rapidly changing consumers' shopping behaviours.In our opinion, the strongest antidote to these pressures is a strong brand.In this report, we quantify the power of each company's brand by its ability to take pricing, using a number of metrics, and conclude that while brand strength varies widely across the consumer packaged goods space, beverages and tobacco generally enjoy stronger positions.We also dive deep into cost advantages and show that while some of the large diversified CPG firms may generate economies of scope, economies of scale are more prevalent in industries with a homogeneous manufacturing process.Lead Analysts: Adam Fleck, CFA; Philip Gorham, CFA, FRM; R.J. Hottovy, CFA; Erin Lash, CFA; Ken Perkins, CFAFull report below the fold...&nbsp;

Morningstar Consumer Observer: Shopping for the CPG Brands Best Positioned for a New Era in Commerce

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Equity Bottom-Up

Philip Morris (PM) plans to sell down its stake in HM Sampoerna (HMSP)&nbsp;in order to comply with the minimum free-float requirement that is set to kick-in starting Jan 2016. PM currently has a 98.18% stake and needs to sell approximately 5.7% to comply with the new requirements. Thus, this could pan out to be a US$1bn+ deal and will likely propel the stock into JCI index, which effectively means no investment managers covering ASEAN/Asia can afford to ignore it.&nbsp;With ASEAN investors tied up with looking at the HMSP deal, we thought it would be interesting to compare HMSP with another regional &nbsp;tobacco behemoth, ITC.While one is shaping up to be a piping hot deal (owing to index weightage, clean governance, etc), the other continues to languish from investor disinterest, even though in the medium to long term both the stocks face similar threats.Below is a series of charts that compares the two regional giants on various metrics.&nbsp;The conclusion remains fairly obvious, as the metrics remain highly skewed&nbsp;towards one participant.&nbsp;

Philip Morris (PM) plans to sell down its stake in HM Sampoerna (HMSP)&nbsp;in order to comply with the minimum free-float requirement that is set to kick-in starting Jan 2016. PM currently has a 98.18% stake and needs to sell approximately 5.7% to comply with the new requirements. Thus, this could pan out to be a US$1bn+ deal and will likely propel the stock into JCI index, which effectively means no investment managers covering ASEAN/Asia can afford to ignore it.&nbsp;With ASEAN investors tied up with looking at the HMSP deal, we thought it would be interesting to compare HMSP with another regional &nbsp;tobacco behemoth, ITC.While one is shaping up to be a piping hot deal (owing to index weightage, clean governance, etc), the other continues to languish from investor disinterest, even though in the medium to long term both the stocks face similar threats.Below is a series of charts that compares the two regional giants on various metrics.&nbsp;The conclusion remains fairly obvious, as the metrics remain highly skewed&nbsp;towards one participant.&nbsp;

Quick note - ITC vs HMSP; Who's the tobacco king? 

India

ITC Limited, a member of BAT Group of UK, is a holding company, which has a diversified presence in Cigarettes, Hotels, Paperboards & Specialty Papers, Packaging, Agri Business, Packaged Foods & Confectionery, Branded Apparel, Greeting Cards and other FMCG products.

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ITC Ltd (ITC IN)

Governance, Valuations and the Crisis of State Capitalism

In January’s ‘Government and Markets’ report, we used the themes in the 2016 GEM overview and China outlooks to introduce our intra-GEM country...

John-Paul Smith

A to Z - Amazon's Growth Story

Amazon.com has recorded one of its best years ever. Many investors are following its success while also wondering if the future will be as bright....

Ishita Jain

China and the EM Ugly Contest

Our bearish outlook for 2016 predicated on the rising risk of a “sudden stop” for China and uncontrolled FX depreciation across EM is unfortunately...

John-Paul Smith

Morningstar Consumer Observer: Shopping for the CPG Brands Best Positioned for a New Era in Commerce

Seismic changes are affecting the consumer packaged goods industry as consumers are becoming less brand loyal and supermarkets are under attack...

Morningstar, Inc.

Quick note - ITC vs HMSP; Who's the tobacco king?

Philip Morris (PM) plans to sell down its stake in HM Sampoerna (HMSP) in order to comply with the minimum free-float requirement that is set to...

Sumeet Singh

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