A rite that attracts financial independence
Below she discusses the three factors which will likely shape the investment landscape in Nov was a challenging year for investors. A stronger US dollar led to heavy selling across Emerging Markets; political volatility unnerved investors and asset markets repriced to take into account rising interest rates. The global economy experienced significant currency volatility, as well as a de-synchronisation of growth between the US and the rest of the world.
The reach of the US political agenda into trade dampened growth expectations in several trade dependent regions including Asia and Europe.
Emma Martin (socialist)
The China-US trade dispute notably puts the two largest global powers at the table of a difficult negotiation. Inthree factors will likely shape the investment environment.
Each could have a major impact on asset markets as they could trigger a shift in market leadership. In addition, long-term trends such as climate change, sustainability, and artificial intelligence AI seem on track to grow in importance also reshaping the investment landscape.
In short, could easily be a transition year marking the start of a new era in the post Global Financial Crisis world. A peak in US interest rates The US equity market outperformed in as benefits from tax cuts and share buy-backs contributed significantly to corporate earnings growth.
Looking intothe market is facing an important inflection point either when the Federal Reserve Fed signals that it has tightened sufficiently or when investors start anticipating the end of the US interest rate cycle.
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When this happens, the US dollar — relative to other major currencies — should stabilise and even weaken, option subject the economic environment in the rest of the world remains stable. This would challenge consensus investment positioning possibly as early as binary options corse first half of A re-synchronisation of the global economy A re-synchronisation of global growth is likely in as the US economy slows.
Such measures, historically, have been supportive of Emerging Market performance. Inthe major a rite that attracts financial independence banks will likely shift from quantitative easing QE to quantitative tightening QT.
Although QT is an important development and a source of volatility for asset markets, the tightening process is expected to be gradual and liquidity will likely remain sufficient. This war, we believe, will have varying degrees of impact on Asia. That said, its true impact will likely be revealed in and may not be all negative.
There may be, for example, a redistribution of trade and investment activities throughout the region, potentially benefiting the technology sectors in Taiwan and Korea, as well as the manufacturing companies in Malaysia and Vietnam. Since the beginning of the trade war, China has lowered import tariffs, which will make US products cheaper for Chinese consumers and companies.
Furthermore, China seems unlikely to retreat from its policy of raising its technology profile, potentially differentiating itself from the US. Billion option is very interesting, for example, to note that the Shanghai Stock Exchange, in Novemberannounced that it will set up a science and technology innovation board with a pilot registration process.
This new trading platform should make it easier for Chinese high-tech companies to access funding3. The trade war is a competitive race of sorts between the two largest world powers.
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Given its ambition to be an AI world leader byChina has developed rapidly in this field, and is creating a new world order with the US as discussed in my previous article Geopolitical Darwinism in the Age of Artificial Intelligence. In such a dynamic world, investors cannot afford to ignore the impact of AI.
This ongoing trade war goes beyond trade. Its economic consequences will be very important to investors. Climate change and sustainability Long-term themes such as environmental, social and governance ESG should continue to make inroads in Technology again will be an enabler — providing greater transparency — and a determinant in resolving ESG-related issues by helping raise energy efficiency, productivity and more.
This will likely challenge executive management teams on their vision and resolve to tackle long-term challenges. Volatility, however, is not a bad thing. According to Ben Dunnour Head of Quantitative Strategies, low volatility strategies thrive in choppy markets. Ultimately, selected risk assets should stand out as volatility edges higher. Exposure in selected Asian equities and fixed income can provide attractive returns in In a slower growth environment, investors should need to pay closer attention to valuations.
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As such, investors could also include contrarian value equity strategies in their portfolios. An active allocation to a rite that attracts financial independence asset classes and styles holds the key to more efficient diversification and superior risk-adjusted returns. Investors can diversify by combining factors that are relatively uncorrelated with each other.
Income and outcome oriented multi asset strategies will be key in helping investors ride through this transition year. Asian insights. Global expertise. Navigating dynamic markets requires diverse views and a deep understanding of local nuances.
At Eastspring, the diversity of our investment teams and our culture of open communication bring out high conviction views that underpin our best investment ideas. The following highlights the opportunities and challenges that our CIOs consider to be at the forefront in the new year.
Value stocks have finally turned in the third quarter of after a difficult period starting end He is finding value opportunities in Asian financials given their attractive valuations and healthy capital ratios. He remains cautious on Japan in general but sees attractive opportunities from a bottom-up perspective.
She is, however, avoiding a rite that attracts financial independence Chinese property companies that are aggressively expanding their land banks despite tightening credit conditions.
For currencies, she expects the Indonesian Rupiah and Indian Rupee to outperform. From the ground up At the country-wide level, our country CIOs provide not only their local expertise but also unique perspectives, which are crucial to our global investment decision making. For example, the Chinese government has begun implementing easing measures, such as tax cuts, to limit the downside risks associated with the ongoing trade war.
He notes that Indonesian corporates may face tighter borrowing conditions given the elevated bank loan-to-deposit ratios. Over in Malaysia, Doreen Choo CIO, Malaysia believes the current account surplus makes the domestic market more resilient; she thinks select consumer staples and oil and gas exporters are likely to stand out.
With the launch of the next generation of mobile internet connectivity, he prefers to focus on companies in the 5G supply chain.
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Woong Park CIO, Koreaon the other hand, prefers to focus on the more defensive sectors and quality growth equities as earnings and economic momentum decline. Within fixed income, he favours shorter duration bonds as the increasing interest rate gap between the US and Korea will likely put pressure on domestic rates.
With strong earnings growth, attractive valuations and a stable currency, The Trieu is confident that Vietnam will continue to attract more foreign investor interest.