Here are this month’s highlights: The direction of Covid policy is now very clear, and a full reopening scenario is upon us. The government has stepped in to provide support to the all-important property sector. We think China is poised for a positive 2023.
Global Market Themes: US CPI Inflation surprises to the downside, catalysing a risk-on rally Federal Reserve likely to slow pace of interest rate increase going forward China reopening narrative boosts global risk appetite Economic growth continues to slow in Europe and the United Kingdom SA Market Themes: Risk appetite returns, catalysing a strong month for equities Annual inflation remains elevated, trending sideways in the mid-7% range Manufacturing activity appears resilient to ongoing loadshedding
Here are this month’s highlights: The recent Covid-related protests in multiple cities suggest that volatility will persist in the near term. China has more STEM graduates than India, the US, Russia, Iran, Indonesia and Japan combined. It is perhaps no surprise that China has the most unicorns (start-ups that are worth more than USD1bn) in the world after the US.
Global Market Themes: Narrative of global slowing in place of interest rate hikes buoys risk assets Third quarter company earnings in line or better than expected, supporting equities Appointment of new prime minister provides stability for UK markets Xi Jinping secures third term. No end to zero-Covid policies SA Market Themes: Domestic markets post strong recovery Inflation slows marginally to 7.5% in September Tax collection benefits from higher global commodity prices Debt-to-GDP estimated to peak at 71.4%
Here are this month’s highlights: The Hong Kong’s Hang Seng Index fell by 6.4% on the Monday after the new Politburo Standing Committee was announced at the Chinese Communist Party Congress. The Golden Dragon Index of US-listed Chinese companies fell by 14.4% on the same day, driven by panic selling by foreign investors. Contrary to the market reaction by international investors, most domestic managers we spoke to are either less bearish or simply not surprised by the outcome of the Party Congress. Chinese equity markets offer a wealth of opportunities, although their composition will look quite different in the next 10 years. While this geopolitical risk is well priced into Chinese equities, it is far from fully reflected in global companies that either rely on sales to the world’s largest population or on manufacturing and imports from China.
Global Market Themes: Equity and fixed-income markets experience more pain in September Bank of England abruptly reverses course on Quantitative Tightening Japanese Yen sees first currency intervention in 24 years US Federal Reserve remains resolute in raising rates SA Market Themes: Local markets follow global peers lower Loadshedding continues to take its toll on economic activity The Reserve Bank adds a further 75 basis points
Here are this month’s highlights: The bulk of the manager cohort was underweight to China compared to the neutral benchmark index weight. The median global emerging market manager has also come to realise the importance of Chinese A shares. Among Asian managers, only the 5th percentile had half of their portfolios in the country matching the MSCI Asia ex Japan Index. Managers who historically had a smaller allocation to China were forced to change tack with the opening of the A-share market.
Global Market Themes: Developed Market equities fall; Emerging Markets post modest gains The Federal Reserve doubles down on interest rate policy stance Eurozone inflation accelerates, exacerbated by soaring energy prices Chinese economic activity continues to slow, despite marginal policy easing SA Market Themes: Equities lose ground while bonds flat-to-positive Inflation accelerates to an annualised 7.8% in July GDP contracts in the second quarter SA faces potential grey listing by global money monitoring watchdog
Here are this month’s highlights: The MSCI China and MSCI China A Onshore indices were down 9.4% and 6.0% respectively for the month. Value-style managers are starting to show improved results. More than two-thirds of the bottom quartile managers have outperformed the median since January 2021. Operational setup can be as important as investment acumen when evaluating a manager.
