This weekly newsletter pulls together summaries of the top ten most-read Insights across Macro and Cross Asset Strategy on Smartkarma.
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1. 2024 High Conviction Idea: The Case for a Rotation Out of Japan into Hong Kong – Part 3
- Risk-Reward now skewed towards reward in the Hong Kong market.
- Barbell strategy with both high-beta and lower volatility dividend stocks.
- Some initial ideas included to add or start a portfolio incorporating HK stocks.
2. KOSPI Superperformance Stocks (2019-2023)
- In this insight, we analyze the top 10 performing stocks in KOSPI in each of the past five years (2019-2023) as well as for this entire period.
- The top 10 performing stocks in KOSPI were up on average 310% in 2023, sharply outperforming KOSPI which was up 19%.
- There are some important takeaways from a review of the top 10 performing stocks in each of the five years in KOSPI, including market cap, sector rotation, and turnarounds.
3. EM by EM #37: The Taiwan election & the Trade war
- A victory for Lai in the upcoming election has the potential to significantly elevate geopolitical risks.
- Should Taipei fail to maintain a satisfactory relationship with Beijing threats of retaliation will fuel derisking going forwardThe Taiwan election could reignite another round of cold trade sanctions between the United States and China.
- Given the current hawkishness of the Biden administration, it’s unlikely that this stance will be softened in the upcoming U.S. election.
4. Simple Math – Why Rates Must Fall!
- The divergence among (bond) investors is rapidly increasing. One group expects yields to rise further, while the other expects yields to go down and remain low. I’m in the latter.
- To maintain debt sustainability, real yields must remain below real GDP growth. But with declining potential GDP growth, this is not the case currently, and this includes the US.
- In the Eurozone, the real yield – real GDP picture is distorted because the ECB must aim monetary policy at the weakest link, Italy.
5. What’s next in the Red Sea and Taiwan?
- Welcome to the second Great Game of the year.
- What an action-packed start to 2024 we’ve had in geopolitics, and the coming weeks are looking no less eventful.
- This week, we take a look at the status in the Red Sea as well as Taiwan and give our prediction as to what the coming weeks will bring.
6. Vietnam: Resilient Economic Growth Driven by Friend-Shoring & Bamboo Diplomacy
- Vietnam’s GDP expanded by 5.05% in 2023, lower than the government’s official target of 6.5%
- Chinese President Xi Jinping’s first visit to Vietnam in six years aims to strengthen ties between the two communist nations.
- China and the US vying for cooperation with Vietnam in developing rare earth minerals essential for energy transition.
7. US Employment Data Confirms a Weakening Economy
- The December US Employment report shows a weaker outlook than the headline suggests.
- A loss of over 1.5 million full-time jobs in December.
- Excluding government jobs, an exceptionally low number of new full-time jobs were created over the last year.
8. USD Liquidity Watch: Trading the end of QT
- Welcome to another edition of our USD Liquidity Watch series.
- The investment bank consensus is now (finally) converging towards our long-held view that the US Treasury is effectively behind the liquidity steering wheels at the Fed.
- Lorie Logan of the FOMC said on Friday that “… given the rapid decline of the ON RRP, I think it’s appropriate to consider the parameters that will guide a decision to slow the runoff of our assets.
9. Charting Beyond the Sanguine Stock Market
- The upcoming US elections and eventual Fed pivot may sway the stock market positively
- But the different states of the US business cycle can prospectively instigate different equity market outcomes
- Hence, it is important to monitor the roughly coincident or almost contemporaneous risk of a recession in the US for potential clues
10. Central Banks’ Policy Pivot Impact on Developed Markets
- Throughout 2023, the global developed economy was at the forefront of tackling rising inflation that has been gathering steam since mid-2022.
- The majority of developed G20 countries saw their central banks raise policy rates at record pace to tame rampant price increases.
- Rapid tightening and the potential of an upcoming pivot has resultantly upended stability in growth prospects for the upcoming year.
