Asia: Sound fundamentals suggest no repeat 1997–1998 crisis

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While Asian currencies have been quite unstable in recent months, comparisons with the Asian Financial Crisis are over the top, in our view. External positions of the region’s economies are in a much healthier state today. A big problem, however, is that global export demand has remained sluggish for so long, depriving the currencies of a key source of strength.... Read more continue reading

China’s policies and fundamentals converge

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Given all the negative commentary about China at the moment, it’s difficult for many investors to get a balanced perspective on the risks and opportunities there. Our bottom-up research, however, is uncovering early signs of stabilizing trends which point to a better year for the country in 2016. Two are particularly interesting, in our view:... Read more continue reading

Megatrends: Asia rising

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The centre of global economic activity has seen a clear shift away from Developed Markets and towards Emerging Markets since the turn of the century. China has been at the heart of this. However, the traditional drivers of growth that have propelled Emerging Markets to this prominence are becoming unsustainable. The next stage of growth... Read more continue reading

China after the market intervention: What’s next?

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China’s efforts to stem the market crash have had limited success so far. In our view, attempts to boost domestic demand via the policy banks will only help prevent further economic damage, while a rebound in exports is also unlikely. However, we believe a nascent recovery in the housing market could provide a more effective... Read more continue reading

Contagion – A perspective

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Recent events in China have sent tremors across global equity markets. Understanding the sources of these tremors and their interplay with our twin themes of secular stagnation and contagion will have important investment implications. This white paper is co-authored by three of Epoch Investment Partners, Inc’s most senior investment people – William Priest, CEO and... Read more continue reading

China: What’s really behind the currency move?

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China’s decision earlier this month to change the way in which the central parity or “fix” rate of the renminbi (RMB) is determined has been widely characterised as a devaluation designed to shore up the country’s export trade. We question this assessment, for a number of reasons. In our view, the move is much better... Read more continue reading

Macro Matters: Five reasons the market oversold

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In last week’s “Macro Matters,” I argued that China’s currency regime change is bad news for the global economy and risk assets unless it will be accompanied by further domestic monetary easing and reforms in China and unless central banks elsewhere smell the coffee and ease policy further or postpone tightening. My point was that... Read more continue reading

Malaysia: capital controls to support ringgit would be disruptive

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China’s surprise currency devaluation, which triggered a sell-off in many Asian currencies, has increased Malaysia’s headache as the country had already been struggling to halt the ringgit’s decline. Reintroducing capital controls to support the currency—as some in the market expect—would be counterproductive, but we believe that investors should be vigilant about such a tail risk.... Read more continue reading

Shock waves from the rumbling Renminbi

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The market will calm down after the biggest currency devaluation by China in almost two decades which has sent shock waves through global commodity, interest rate and stock markets, says George Lucas, managing director Instreet Investment. “The 3 per cent drop in the currency last week is relatively small for a developing country trying to... Read more continue reading

China’s currency devaluation increases certainty

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China’s surprise currency devaluation sparked a debate on whether it was part of the country’s ongoing financial reform or a measure to boost flagging exports. The plot thickens, as the flexibility now given to the currency is, ironically, forcing the authorities to step up their intervention, at least for now. It will take some time... Read more continue reading