No, the fall is a net benefit. Falling commodity prices create more divergent emerging markets conditions, generally benefitting net commodity consumers at the expense of net commodity producers. Among emerging markets, net commodity importers are largely Asian, while exporters are more concentrated in Europe, Latin America, South Africa, and the Middle East. Historical relationships between…
In many ways, 2014 was a tale of two halves as returns reversed in the second half. Renewed US dollar strength and falling commodity prices were key contributors to the reversal. This brief chart book looks at returns and other market metrics for 2014.
Not yet. Commodity prices have indeed tumbled this year, with crude oil falling by one-third while prices of copper, corn, and other key commodities also declined. And while as value investors we typically look to increase exposure to an asset as prices fall, in this case it is useful to review the broader picture, including…
2014 has been a perplexing year for many investors and 2015 may prove no less vexing. Weighing the macro, micro, and “known unknowns,” portfolios may struggle to generate returns next year comparable to those in 2013 or perhaps even those seen this year. In this piece we briefly review the year nearly past and then…
The Bank of Japan’s (BOJ) surprise announcement that it would dramatically ramp up its QE efforts is a tacit admission that “Abenomics” is stalling, and supports our view about the underlying health of the Japanese economy: excessive debt levels, demographics, and overdue structural reforms are serious headwinds to growth. To briefly recap, on October 31…
Though metals and mining equities account for only 17% of the MSCI World Natural Resources Index, their drastic underperformance since 2011 can still be felt in portfolios. Over the last decade, as demand from China and other countries pushed up the slope of demand curves for industrial metals, a supply response by the mining industry…
This chart book presents representative marketable and hedge fund manager performance for third quarter 2014. This quarter US Core Bond, US Bond, and Cash Management managers posted the highest median returns, while Pan-European Equity managers posted the lowest median returns.
Despite the ongoing efforts of central banks to debase their currencies through increasing their monetary bases and some outright calls for devaluations, consumer prices remain weak across much of the developed world, and many market observers have begun to focus on the too-real possibility of the global economy falling into a deflation “trap.” Deflation now…
The Capital Markets Authority of Saudi Arabia recently announced its intention to open the local equity market to direct investment by qualified foreign investors at some point in 2015. These investors must be reputable and substantial financial institutions that manage a minimum of US$ 5 billion in assets. While foreign investors have obtained economic exposure…
By comparing the net flow rate with the real investment return, an institution can determine whether its LTIP is successfully sustaining its role in the institution’s business model The net flow rate is the regular LTIP payout rate plus reinvested operating surpluses, capital additions, and capital withdrawals. Over the long term, the real investment return…