In today’s briefing:
- Asia Ex-Japan Active Funds. Big Q1 Underperformance.
- Has Your Portfolio Realized That The Money Printer is Out of Order?
- Latin American Currencies on Top
Asia Ex-Japan Active Funds. Big Q1 Underperformance.
- 80% of active Asia Ex-Japan managers underperformed the benchmark in Q1
- Value managers were the only Style group to outperform the benchmark, with Aggressive Growth and Growth some way behind
- Underweights in NIO Inc, Meituan and overweights in HDFC Bank generated relative outperformance, but were outgunned by overweights in Sea Ltd, Mediatek Inc and underweights in the China state banks.
Has Your Portfolio Realized That The Money Printer is Out of Order?
- The money printer is out of order in 2022. Actually, we are even looking at BRRRR in reverse : the flow of credit reaching the private sector continues to materially slow down , as indicated by my G5 Credit Impulse metric.
- On top of it, inflation is roaring its ugly head and Central Bankers are committed to turning monetary policy into explicitly restrictive territory as fast as possible.
- When the flow of credit slows down and policymakers double down by pushing monetary policy into restrictive territory, you don’t play offense with your portfolio. You play defense
Latin American Currencies on Top
- The US dollar has strengthened this year in line with my expectation, but the surprise has been that EM currencies have performed well despite the dollar strengthening.
- The solid EM FX performance is entirely due to Latin American currencies which have performed well due to their very high carry, attractive valuations, and positive political developments.
- In the near term, I expect LatAm currencies to continue to perform well but the environment may change as the year progresses.
Before it’s here, it’s on Smartkarma
