Asia has a structural and cyclical need for alternative credit providers; given where Asia is in the credit cycle, special situations and direct lending strategies should offer attractive risk-adjusted returns Returns for traditional Asian fixed income and credit are unattractive today. However, opportunities remain in the less liquid, underserved, and complex spheres of corporate lending…
Chinese equities have captured headlines recently, with trading volumes surging in Hong Kong and the MSCI China Index (which tracks the performance of Chinese companies listed in Hong Kong) rising 14% over four trading days (April 8–13). The catalyst was a decision in late March by mainland Chinese regulators to allow domestic mutual funds to…
Over the past two years, India has come full circle, moving from a member of the so-called Fragile Five economies with poor macro fundamentals to one of the few emerging markets with a positive macro story. India was among the best-performing equity markets in 2014, returning 24% in US$ terms, compared to -1.8% for emerging…
This chart book provides context on previous US dollar rallies and where the dollar is in the current cycle.
A subdued growth outlook and increased volatility for many asset classes mean investors should be cautious in 2015 We continue to have concerns about the Australian macro environment and expect muted growth and inflation in Australia. China’s rebalancing economy is a top concern for Australia, combined with uncertainties in the domestic economy. Fair valuations and…
New Zealand’s economy is well positioned compared to other major economies, and especially relative to Australia, but external factors will likely impact the local economy and markets New Zealand equities are within our fair value range, though they are getting more expensive. Investors should maintain neutral allocations and, in their foreign equity exposure, overweight European…
Investors should be prepared for increasing stress in China that will impact global markets and create opportunities There are several valid reasons why China may avoid a financial crisis or hard landing given the unique characteristics of the Chinese economy. However, investors should not be complacent. Our view is that the Chinese economy will slow…
Increasing exposure to Chinese equities today requires a long time horizon, or a willingness to be tactical amid what will be a difficult few years A case can be made that Chinese equities are attractive today based on low valuations and may rally strongly if policymakers apply additional stimulus to support the slowing economy. However,…
China’s currency recently experienced its sharpest decline since it unpegged from the US dollar nearly nine years ago. China wants a more volatile exchange rate to introduce two-way risk in the currency market, meaning a continued steady rise in its currency is not a foregone conclusion. To help offset slowing investment growth, Chinese authorities may…
In 2014, we expect a rougher road for Australia, which is currently in a transition phase that has been quite benign so far, but may not remain so.