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)

Zambia Energy / Thematic (Sector/Industry)

After a few months of thinking, I’ve been getting steadily more bearish on just about everything as the biggest political change in years happens next Friday when Donald Trump becomes President of the USA. I honestly don’t think anyone can believe it, including his own supporters and the potential impact is certainly not priced into US markets, with a little bit being priced into Emerging Markets such as Mexico at this point. The simple fact is that nobody knows where we will end up given the range of potential Trumpian outcomes. With regards to oil, if he pursues the trade policies that have been about the only consistent part of his platform, this will clearly be terrible for oil demand. The below looks at two potential shocks on the supply side, an acceleration of the 190 million barrels of strategic petroleum reserve rebalancing, which could unravel a tenuous OPEC deal and the shock impact of the border adjustment tax proposal, which I would assign a 50% probability of passing but would be unlikely to pass until later this year (who knows though). I would now be bearish on oil over the next few months in the face of record financial net length and too many possible pot holes, although I still see supply shocks later this year.

After a few months of thinking, I’ve been getting steadily more bearish on just about everything as the biggest political change in years happens next Friday when Donald Trump becomes President of the USA. I honestly don’t think anyone can believe it, including his own supporters and the potential impact is certainly not priced into US markets, with a little bit being priced into Emerging Markets such as Mexico at this point. The simple fact is that nobody knows where we will end up given the range of potential Trumpian outcomes. With regards to oil, if he pursues the trade policies that have been about the only consistent part of his platform, this will clearly be terrible for oil demand. The below looks at two potential shocks on the supply side, an acceleration of the 190 million barrels of strategic petroleum reserve rebalancing, which could unravel a tenuous OPEC deal and the shock impact of the border adjustment tax proposal, which I would assign a 50% probability of passing but would be unlikely to pass until later this year (who knows though). I would now be bearish on oil over the next few months in the face of record financial net length and too many possible pot holes, although I still see supply shocks later this year.

How Trump Could Change the Oil Game