Return to Cyclical Normality?

Screen Shot 2018-10-09 at 11.17.07Momentum Global Investment Management, one of our UK regulated discretionary investment managers, held their 17th annual investment conference in London last month.

The theme of this year’s conference was ‘Return to Cyclical Normality?’ Ten years on from the global financial crisis, the era of ultra-loose monetary policy is ending and central banks, led by the Fed, are in the process of gradually normalising policy. Is the World now returning to a more normal cyclical pattern, marking the beginning of the end of the extraordinary economic and market conditions of the past decade?

Glyn Owen, Investment Director of Momentum Global Investment Management, with over forty years of market experience, examines this critical question and its implications for investors, as well as the minefield of geopolitics and the rapidly evolving international order. Click here to learn more.

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China, Russia Pare US Treasuries Holdings as Trade Tensions Rise. A Sign of Things to Come?

rtx1gzco.jpgPresident Donald Trump threatened to escalate the trade fight with China into an all-out trade war on Monday, promising to impose massive tariffs on Chinese goods unless Beijing reverses course on its own trade actions.

Meanwhile, foreign governments have pulled back their purchases of longer-term US debt as trade tensions escalate, with Russia dumping half of its holdings. Could this be a sign of things to come? Learn more

China Awakens

unnamed-3.jpgIf you checked the MSCI Emerging Market Index last Friday, you would have noticed the inclusion of 226 new A-Shares of Chinese companies into the benchmark. This is the first step of a very gradual introduction which will continue in September and A-shares only represent 0.4% of the index at present.

While it might seem insignificant, it has triggered a wave of forced buying by passive strategies and could ultimately have a large impact on the composition of the index and investors’ investment universe. In fact, if all those stocks were fully included along with additional mid cap names over time, China could come to represent 50% of the Emerging Markets of which 28% from A-Shares!

What does this mean for your portfolio? Click here to learn more.

China and Russia Looking to Drop US Dollar for Oil Payments

yuan-vs-dollarJust days after Beijing officially launched Yuan-denominated crude oil futures (which are expected to quickly become the third global price benchmark along Brent and WTI), Reuters reports China has taken the next major step in the challenging the US dollar’s supremacy as global reserve currency (and internationalising the Yuan) by paying for crude oil imports in its own currency instead of US dollars.
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China’s Improving Economic Outlook

The risks of a hard landing in China have subsided as the strong economic data releases of January continue to support the country’s improving economic outlook. Exports, measured inchina US dollars jumped 16.7% year on year, from 3.1% in December and beat market calls for 10%, meanwhile imports remained robust at 7.9%, beating the market consensus once again. Inflation figures also surprised on the upside; PPI surged 6.9% to the highest level since March 2011 while CPI rose 2.5%, from 2.1% in December. ‘Seasonal factors’ could have contributed to the encouraging trade data; boosted by the timing of the week-long Lunar New Year beginning in January.

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Weekly Market Update

  • UK market hits twelve consecutive days of record highs
  • Sterling dips ahead of PM May’s Brexit speech
  • Dollar retreats following Trump press conference
  • Chinese trade data shows fall in exports
  • US small business confidence soars

James Klempster (CFA) of Momentum Global Investment Management shares his view:

As Barack Obama’s presidency began in January 2009 – deep in the market sell-off following the global financial crisis – it was reasonable to presume that his job was at best thankless and at worst almost impossible.  Yet, in many ways history may well tell us that his job was simple in comparison to that of his successor.  Obama rode to victory on a tide of optimism and expectation that set him apart starkly from George W. Bush.  Obama’s youth and eloquence stood him apart from the man he replaced.  During that time tensions and the risk of policy missteps were high, but equally expectations were low due to the volume of bad news.

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