How long will it take for the country to find a credible solution and will it be sufficient? After an already disastrous start to the year, Italian banks plunged 30% following the Brexit vote. Obviously there is no direct link between Brexit and Italy, but the uncertainty of the UK… Read More »
Probably the single most contentious debate in emerging markets is the debate over the future of China. Views range from China’s economy being caricatured as a bubble, pumped up by excess debt and an investment-driven bubble in infrastructure and real estate, to those who believe the outlook is much more… Read More »
The Japanese economy is deteriorating and the inflation target looks out of reach. Inflation is falling back into negative territory and core CPI has decreased to 0.6%, a long way from the 2% target. Looking at household and corporate expectations, the situation there is also deteriorating. Confidence indicators have worsened… Read More »
The UK looks like it has voted to leave the EU. We see protracted political and economic uncertainty, leading to a weaker GBP, pushing inflation up, and a hit to growth. In a referendum recession, we expect easier monetary and fiscal policy. Key consequence – profound and protracted uncertainty: Although… Read More »
We’ve seen some favorable headlines from China recently, including better-than-expected industrial activity. But the ‘green shoots’ we see in the Chinese economy are not likely to persist and I expect softness to resume in June or July Chinese real GDP growth slowed slightly to 6.7%, from 6.8% in 4Q15, although… Read More »
The fires fuelling the region’s stock markets are not doused by the rains and will continue smouldering Asia Heating UpAn intense heat wave is currently sweeping through South East Asia with the highest ever temperatures being observed in several countries. Mercury levels have crossed the 40°C (104oF) mark in parts… Read More »
It is now a year since we quit the Chinese stock market. The hyper-activity of policy makers has deterred us from returning but recent data flows suggest it is time to take another look. After a “risk-on” week in financial markets, the mood darkened on Friday as hopes faded of… Read More »
The SNB is clearly in a reactive stance rather than taking a proactive strategy As we had expected, the SNB held its policy rates unchanged (Sight deposit rate -0.75% & 3month Libor -0.25% to -0.75%) while not tinkering with tightening banks threshold exemptions on negative rates. We suspect, given the… Read More »
Chinese markets had a weak start to the year in line with the sell-off in most global risk assets in January as investors focused on: the weak oil price, the future trajectory of US interest rates and, close to home, policy confusion and the uncertainties surrounding the renminbi and capital… Read More »
A slump in key asset values in China could destabilize the economy and the financial sector unless proper measures are in place to anchor investor confidence China’s financial institutions face a harsher year ahead. Corporate defaults are likely to increase as the central government gradually withdraws its implicit support for… Read More »