All posts in category: Global Equities (53)

The Way We Live Now

Wednesday, September 7th, 2016

Positive correlation meets asset allocation theory

Most of the major developed equity markets, except the US, are positively correlated with their local government bond market. This makes portfolio diversification very difficult, but the basic conclusion is that if you think government bonds are going to fall, you should expect equities to fall further.

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China Rehabilitated

Wednesday, August 31st, 2016

This week we upgrade China to overweight relative to global equities and Chinese Financials to overweight relative to the local index. There is some interesting evidence to suggest that the PBoC has begun the forced recapitalisation of Tier-2 banks. This has already caused Chinese Financials to decouple from the sector in the rest of the world and it may lead to the rehabilitation of the country as a destination for international investors.

Forced recapitalisation of Tier-2 banks has begun

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Shine a Light

Wednesday, July 20th, 2016

Good news is not good enough for some investors

The way in which different regions respond to good news can tell us a lot about investor attitudes. The recent US payroll data are a good example of this. The US, China and the Anglosphere – including the UK – responded well; the Eurozone and Japan didn’t. It’s hard to reconcile this reaction with IMF forecasts that make the UK the centre of a global slowdown over the next 12 months.

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