Founder and Strategist, Entext Economics & Strategy

Sean Maher

Founder and Strategist

Entext Economics & Strategy

Entext provides institutional investors with distinctive, actionable asset allocation and thematic research, which typically challenges the market consensus. Our clients range from credit, equity and multi-asset hedge and pension funds to family offices and sovereign funds. 
 
We focus on identifying key inflection points in macro data and relative asset performance amid the 'groupthink'  and confirmation bias that characterizes most investment bank analysis.

Macro Driven Investment Insight

Macroeconomics

<ul><li>The overweight EM view in place since early 2016 focused on North Asia a year ago; that tech bet paid off as did deep cyclicals and resources as China’s investment cycle rebounded.</li><li>While EM remains cheap, the stance is now neutral – China’s ‘growth at any cost’ fetish ended at the recent party congress; de-risking the credit system implies a growth scare and wider EM volatility.</li><li>Komatsu excavator utilization in China has turned negative on a 3mma basis as has FAI growth in real terms; a shift to rental housing and cost benefit analysis on new infrastructure bear watching.</li><li>Long energy vs. mining looks a good commodity bet in 2018 if true deleveraging starts (nominal credit growth sub GDP) – 1-yr yields approaching 3.8% underline the risks.</li><li>Trade sanctions on China from steel to solar panels look likely in H1 as the N. Korean threat reaches a tipping point – the risk of unilateral US action is probably being underestimated.</li><li>EM credit growth ex China is accelerating, and financials/consumer discretionary plays will benefit - after a remarkably concentrated year, performance should broaden alongside earnings momentum.</li><li>Overall, investors should position for a rising USD, yield and geopolitical risk environment toward consumer exposure in markets like ASEAN and even India where earnings momentum is turning.</li></ul>

The overweight EM view in place since early 2016 focused on North Asia a year ago; that tech bet paid off as did deep cyclicals and resources as China’s investment cycle rebounded.While EM remains cheap, the stance is now neutral – China’s ‘growth at any cost’ fetish ended at the recent party congress; de-risking the credit system implies a growth scare and wider EM volatility.Komatsu excavator utilization in China has turned negative on a 3mma basis as has FAI growth in real terms; a shift to rental housing and cost benefit analysis on new infrastructure bear watching.Long energy vs. mining looks a good commodity bet in 2018 if true deleveraging starts (nominal credit growth sub GDP) – 1-yr yields approaching 3.8% underline the risks.Trade sanctions on China from steel to solar panels look likely in H1 as the N. Korean threat reaches a tipping point – the risk of unilateral US action is probably being underestimated.EM credit growth ex China is accelerating, and financials/consumer discretionary plays will benefit - after a remarkably concentrated year, performance should broaden alongside earnings momentum.Overall, investors should position for a rising USD, yield and geopolitical risk environment toward consumer exposure in markets like ASEAN and even India where earnings momentum is turning.

2018 Outlook: As Good as It Gets? Part 1 – EM and Commodities

United Kingdom

iShares MSCI EM Latin America UCITS ETF USD (Dist) is an open-end, UCITS compliant exchange traded fund incorporated in Ireland. The Fund aims to track the performance of the MSCI EM Latin America 10/40 Index. The fund distributes income received to shareholders.

iShares MSCI EM Latin America (LTAM LN)

2018 Outlook: As Good as It Gets? Part 1 – EM and Commodities

The overweight EM view in place since early 2016 focused on North Asia a year ago; that tech bet paid off as did deep cyclicals and resources as...

Sean Maher