Zero-Covid weighs on China’s growth in Q2
Investors' Corner
by Chi Lo
1y ago
A weak second quarter for China’s economy, with GDP growth narrowly avoiding contraction, might mark the low for this cycle (disregarding the pandemic-related dip in Q1 2020). However, even with intense policy support for the economy and less stringent Covid restrictions, any recovery looks set to be gradual at best, leaving 2022 growth short of the official 5.5% target.   At 0.4% year-on-year (YoY), GDP growth in the second quarter of 2022 was down sharply from the already below-target 4.8% in the first quarter. Beijing has already intensified policy easing to boost growth and introduced ..read more
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Talking heads – Four books to read on climate change
Investors' Corner
by Ramon Esteruelas
1y ago
Senior investment specialist for global equities Ramon Esteruelas briefs chief market strategist Daniel Morris on four books he has read on climate change. The books discuss the relevance of climate change science and the reliability of projections, the availability of adaptive and mitigating solutions and breakthroughs, the long road to net zero, and the need for a rethink on growth.    In this Talking heads podcast, Ramon covers:  How to Avoid a Climate Disaster by Bill Gates  Unsettled by Steven Koonin Energy Transitions: History, Requirements, Prospects by Vaclav Smil ..read more
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Talking heads – There is nothing fluffy about (investing in) the cloud
Investors' Corner
by Joanthan Barnett
1y ago
While day-to-day ‘market noise’ may feature big in many investors’ minds, it is worth mining long-term structural trends as well for opportunities. Cloud computing is one such trend, offering many advantages to both public and private sector users of its services and to investors looking for a billion-dollar industry where growth is still in the early stages. Listen to this Talking heads podcast with senior equities portfolio manager Jonathan Barnett and chief market strategist Daniel Morris as they discuss the prospects for secular growth in an industry that enables users to save on ..read more
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Asset allocation video – Recession: The numbers say ‘soon’. Or do they?
Investors' Corner
by Maya Bhandari
1y ago
Expectations are rising that a recession is around the corner, but current economic conditions do not correspond with that outlook: unemployment is low, while demand is strong as consumers catch up after a spell of pandemic-induced parsimony, as Maya Bhandari, head of multi assets, explains to chief market strategist Daniel Morris. They expect to see a hard economic landing with the accompanying spike in unemployment and contraction in spending, but until the middle of next year. By then, company earnings trends may be negative to reflect recessionary conditions and credit spreads should have ..read more
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Geopolitical shocks compound long-term systemic risks for sovereign issuers
Investors' Corner
by Malika Takhtayeva
1y ago
The war in Ukraine has acted to exacerbate or complicate more fundamental and pervasive climate change and energy risks for sovereigns, argues Malika Takhtayeva. As we are all well aware, the war is having significant effects on financial and commodity markets – and economies – worldwide. In a recent blog article, we explored how the crisis is affecting food supplies and how it could impact longer-term food sustainability. However, as can be seen from the UN Food and Agriculture Organization’s food price index (see Exhibit 1), rising food prices were already an issue before the conflict. Rece ..read more
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Weekly investment update – Post Fourth of July blues
Investors' Corner
by Nathalie Benatia
1y ago
First-half returns on equities and bonds were frankly disastrous. Furthermore, establishing a reliable scenario that can stand the test of the coming months will likely challenge many investors. On the one hand, central banks have ‘declared war’ on what looks to be higher-for-longer inflation; on the other, signs of slowing growth have fuelled expectations of an impending global recession.   Can we not just cancel the first half of 2022? What is there to say about market returns? In the first half of 2022, the US Treasury bond market generated negative returns of almost 10% while eurozone ..read more
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Active stewardship on display – Environmental considerations and compensation in focus
Investors' Corner
by Michael Herskovich
1y ago
In our capacity of sustainable asset manager for a changing world, we believe in using our influence to bring about progress towards a more environmentally friendly economic model that is also more inclusive and equitable. Such an approach is conducive to the positive performance of investments over the long term and thus in the interest of clients.   This stance is reflected in our active stewardship of the assets we invest in and hence in our engagement with investee companies and other issuers. It can also be seen in our voting behaviour at annual general meetings (AGMs) of shareholder ..read more
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Asset allocation highlights – ‘When the facts change…’
Investors' Corner
by Maya Bhandari
1y ago
Multi-asset portfolios have been turning more cautious since late February amid scepticism over market forecasts of a ‘soft landing’ in the face of hawkish inflation-fighting central banks and higher bond yields, justifying being short duration in bonds. On equities, this setup leaves us short Europe, but positive on Asia (Japan and China). We remain long commodities.[1]   For central banks, the facts have now changed: inflation has been persistent enough for them to drop the ‘transitory’ moniker and start acting. At the same time, markets do not expect the US Federal Reserve, or the ECB ..read more
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Sustainable by nature sequel – Our portfolio biodiversity footprint
Investors' Corner
by Sustainability Centre
1y ago
Research has found that on a number of levels, nature is unravelling. This poses an existential threat to societies and economies – and by extension asset owners and investors. As an asset manager with clients who depend upon a stable biosphere, we have a responsibility to understand how our investments impact nature and how nature loss may translate into financial risks.   Such an understanding involves carrying out regular research. Just over a year ago, we presented our biodiversity roadmap. We assessed our dependencies and impacts on nature – in particular, our exposure to water and d ..read more
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Talking heads – For defensive and attractive, choose real estate debt
Investors' Corner
by Christophe Montcerisier
1y ago
Investors looking for alternatives to under-pressure equities and bonds, or just diversification, should consider real estate debt. Loans to finance offices, warehouses and other buildings have attractions including inflation-proofing in the form of indexation and yields that exceed money market benchmarks. Listen to this Talking heads podcast with Christophe Montcerisier, head of real estate debt, and chief market strategist Daniel Morris. They discuss the absence of a direct and immediate link between higher interest rates and the performance of real estate debt and the defens ..read more
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