Is the Decline in Chinese Equities Justified by Market Fundamentals?
We don’t think so, as the markets are pricing in more severe conditions than we believe are warranted.
Equities
2022 New Zealand Outlook: Balancing the Pivot
New Zealand’s COVID-19 containment strategy served the economy well during the early days of the pandemic. However, New Zealand equities and bonds suffered in 2021 as growth slowed to a halt late in the year due to lockdown measures and inflation moved higher due to labour market constraints. Heading into 2022, New Zealand authorities have pivoted the strategy from zero–COVID-19 to minimisation and protection, while still embarking on a monetary policy tightening cycle. Balancing both strategies will be key to supporting New Zealand’s economic growth in 2022.
Keep Your Pencil Sharp on Your Active Value Exposures
The prospect of higher interest rates has contributed to recent equity market volatility and provided a wake-up call for investors underweight some traditional value sectors. What may surprise some investors is that even managers that style themselves as value-oriented may be underweight bellwether value sectors. Now is a good time to sharpen your pencil on value manager exposures.
Decades of Data: United Kingdom 1900–2021
The 2021 UK edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
Decades of Data: United States 1900–2021
The 2021 US edition of our annual report on the history of financial markets provides context for the range of returns investors can expect from equities, bonds, and cash; reveals the importance of various components of equity returns; examines the evidence for equity mean reversion; and reviews the relationship between initial valuations and subsequent returns for equities and bonds.
How Should Investors Alter Portfolios Considering the War in Ukraine?
Thoughtfully, if at all. At this stage most investors should examine portfolio risks related to the war and monitor market developments.
Market Matters: February 28, 2022
Russia’s invasion of Ukraine sent shockwaves across the world, creating a tragic humanitarian and geopolitical crisis, and introducing new uncertainty to the global economy and financial markets. Investors also continue to grapple with ongoing inflationary risks, central bank policy changes, and COVID-19 developments.
Do Significant Geopolitical Events Tend to Precede Equity Bear Markets?
Global equities tend to sell off following major geopolitical events, but such declines have historically been mild and short-lived, far below the 20% drawdown threshold that is typically considered a bear market.
Tighter US Monetary Policy May Limit Upside Potential of Risk Assets
Central banks across the globe are poised to raise policy rates in response to inflation concerns. By examining how US policy rates have impacted US risk assets historically, we consider how assets may react today. These tighter financial conditions may cap the upside potential for risk assets. Within equities and credit, the risks are particularly pronounced in growth stocks and investment-grade corporate bonds.
VantagePoint: Jumpstarting the Energy Transition
This year may prove to be pivotal in the transition from fossil fuels to renewables. Policy makers, businesses, and investors are accelerating commitments to bring greenhouse gas emissions to net zero by 2050, while technological advances and economics in sectors, like renewable energy and EVs, are reaching more competitive functionality and cost. Even as the energy transition gains speed, we are still in the very early days and anticipate a long and disruptive transition.