EM PM, Ecstrat

Emad Mostaque

EM PM

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.

Thematic (Sector/Industry)

This note looks at the background of the recent Ankara bombing, the political situation in Turkey and its position in the region.The note starts with an analysis of who benefits from the political violence we have seen reintroduced to Turkish politics and how it is sharpening the differences between various groups inside Turkey (the final conclusion is al Qaeda benefits most, ignored by most).We then consider the political and religious background of the AKP and how it impacts its current actions and the efficacy of the security forces is then considered, finishing with some thoughts on the Battle of the Five Armies that we are now seeing in Syria and why Russia has now entered the fray.The conclusions are somewhat somber, but it feels like we may be close to a bottom in some key areas with a path to ruin unlikely and some level of political stability to return to Turkey with my core view still being an AKP majority for November 1st, with a CHP-coalition next most likely, both of which would cause the market and currency to rally in the next few weeks.

This note looks at the background of the recent Ankara bombing, the political situation in Turkey and its position in the region.The note starts with an analysis of who benefits from the political violence we have seen reintroduced to Turkish politics and how it is sharpening the differences between various groups inside Turkey (the final conclusion is al Qaeda benefits most, ignored by most).We then consider the political and religious background of the AKP and how it impacts its current actions and the efficacy of the security forces is then considered, finishing with some thoughts on the Battle of the Five Armies that we are now seeing in Syria and why Russia has now entered the fray.The conclusions are somewhat somber, but it feels like we may be close to a bottom in some key areas with a path to ruin unlikely and some level of political stability to return to Turkey with my core view still being an AKP majority for November 1st, with a CHP-coalition next most likely, both of which would cause the market and currency to rally in the next few weeks.

Despite recent weakness Gulf markets have proved to be some of the most resilient in EM in the face of collapsing oil prices. There is evidence that Qatar and Abu Dhabi in particular may provide a safe haven in turbulent markets and other regional markets look to be approaching a market even in a low oil price environment. Societal change has also started, potentially resulting in more resilient nations in the future.

Despite recent weakness Gulf markets have proved to be some of the most resilient in EM in the face of collapsing oil prices. There is evidence that Qatar and Abu Dhabi in particular may provide a safe haven in turbulent markets and other regional markets look to be approaching a market even in a low oil price environment. Societal change has also started, potentially resulting in more resilient nations in the future.

In line with our expectations from a few months ago Saudi has ramped up production into the summer to drive down oil prices, adding 0.9mbpd since the start of the year to go 2.5mbpd above their historic quota, equivalent to the expected return of Iranian crude. This should drag down energy stocks and the whole curve, both of which should bottom this summer.

In line with our expectations from a few months ago Saudi has ramped up production into the summer to drive down oil prices, adding 0.9mbpd since the start of the year to go 2.5mbpd above their historic quota, equivalent to the expected return of Iranian crude. This should drag down energy stocks and the whole curve, both of which should bottom this summer.

Saudi is flooding the oil market, not Iran

While slightly later than expected, a comprehensive deal on Iran's nuclear weapons program has now been reached. We think this is a good deal that stops nuclear breakout. Iran offers exceptional investment opportunities with the TSE at 6x PE and yielding double digit dividends, but the near term impact will be to continue oil's decline back to its lows, potentially taking energy stocks with it.

While slightly later than expected, a comprehensive deal on Iran's nuclear weapons program has now been reached. We think this is a good deal that stops nuclear breakout. Iran offers exceptional investment opportunities with the TSE at 6x PE and yielding double digit dividends, but the near term impact will be to continue oil's decline back to its lows, potentially taking energy stocks with it.

Transport Sector, China and Asia-focused Research

Charles De Trenck

We are in the sweet spot of a recovery in tanker shipping coming after the sub-sector has marked multi-year lows. The driver has been oil price rebounds which itself has driven a promise of higher dividend distributions.

We are in the sweet spot of a recovery in tanker shipping coming after the sub-sector has marked multi-year lows. The driver has been oil price rebounds which itself has driven a promise of higher dividend distributions.

Key Juncture for Tankers and How to Get Proper Tanker Exposure

United States

SemGroup Corp. moves energy through a network of pipelines, terminals and storage tanks. The Company purchases, sells, processes, transports and stores energy, including gas liquids, asphalt and refined products.

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Semgroup Corp Class A (SEMG US)

Ankara: Cui Bono?

This note looks at the background of the recent Ankara bombing, the political situation in Turkey and its position in the region.The note starts...

Emad Mostaque

Will the Gulf remain resilient?

Despite recent weakness Gulf markets have proved to be some of the most resilient in EM in the face of collapsing oil prices. There is evidence...

Emad Mostaque

Saudi is flooding the oil market, not Iran

In line with our expectations from a few months ago Saudi has ramped up production into the summer to drive down oil prices, adding 0.9mbpd since...

Emad Mostaque

Iranian deal done

While slightly later than expected, a comprehensive deal on Iran's nuclear weapons program has now been reached. We think this is a good deal that...

Emad Mostaque

Key Juncture for Tankers and How to Get Proper Tanker Exposure

We are in the sweet spot of a recovery in tanker shipping coming after the sub-sector has marked multi-year lows. The driver has been oil price...

Charles De Trenck

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