Taiwan: Risks Rising but Remains Relatively Attractive (Part 5 of 7)

Malaysia: China, Cronyism and the Siege Mentality (Part 6 of 7)

Thailand, Philippines and Indonesia: Not Compelling but Relatively Low Beta in 2017 (Part 7 of 7)

India: Elections, Incremental Progress and the Decline of Deference (Part 3 of 7)

China: Recent Corporate Improvement an Illusion Without Reform (Part 2 of 7)

Emerging Market Equities in 2017; Key Issues to Monitor by Market (Part 1 of 7)

Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

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.

Cross Asset Strategy

<p>Korea underperformed the main EM benchmark in 2016, but only by a very marginal amount. The main features of the market were the underperformance of mid and especially smaller company shares, with the MSCI Korea Small Cap index down by 15.5%, a full 25 percentage points lower than the MSCI Korea Index, this being one of my few successful predictions made at the start of 2016. The strong performance of the main market despite a year of relatively sluggish growth accompanied by some real distress…</p>

Korea underperformed the main EM benchmark in 2016, but only by a very marginal amount. The main features of the market were the underperformance of mid and especially smaller company shares, with the MSCI Korea Small Cap index down by 15.5%, a full 25 percentage points lower than the MSCI Korea Index, this being one of my few successful predictions made at the start of 2016. The strong performance of the main market despite a year of relatively sluggish growth accompanied by some real distress…

Korea: Chaebol Under Pressure but Who Will Benefit? (Part 4 of 7)