Growing Risks of a Crisis of Confidence in Chinese Policy Settings

Asian Equity Markets (Ex-China) Overview; Korea, Taiwan and India

Malaysia: Can Mahathir Let Go - The Corporate Sector and the Game of Patronage

The US/China Relationship: Investors Complacent Despite Irreconcilable Differences

Growth Shock Is the Next Phase for Global Equity Markets

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

Multiple Countries / Cross Asset Strategy

<p>Phase one of the EM sell-off has been driven by the rising <a href="https://www.smartkarma.com/entities/22821" target="_blank" data-smartkarma-citation="entities:22821:1">USD (USD CURNCY)</a> and concerns about the impact of monetary tightening, compounded by investors belatedly rebalancing portfolios away from emerging markets towards US equities, having underestimated the inherent strengths of the US economy and corporate sector since 2009.</p><p>As I predicted in the <a href="https://www.smartkarma.com/insights/the-us-china-relationship-investors-complacent-despite-irreconcilable-differences" target="_blank">May</a> and <a href="https://www.smartkarma.com/insights/growth-shock-is-the-next-phase-for-global-equity-markets" target="_blank">June</a> reports on this site, markets have now moved into phase two, comprising a scare around global growth, given the increasingly obvious problems through much of Europe and in the major emerging economies, due to domestic political issues and/or upward pressure on domestic interest rates, but above all the threat of increasing trade tariffs.</p>

Phase one of the EM sell-off has been driven by the rising USD (USD CURNCY) and concerns about the impact of monetary tightening, compounded by investors belatedly rebalancing portfolios away from emerging markets towards US equities, having underestimated the inherent strengths of the US economy and corporate sector since 2009.As I predicted in the May and June reports on this site, markets have now moved into phase two, comprising a scare around global growth, given the increasingly obvious problems through much of Europe and in the major emerging economies, due to domestic political issues and/or upward pressure on domestic interest rates, but above all the threat of increasing trade tariffs.

Still Too Early to Buy Emerging Equities Given the Deteriorating Outlook for China and India