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The Renminbi Plays Defense

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The Renminbi Plays Defense

Wei He
27 Sep 2022
The global surge in the US dollar is claiming victim after victim, and China has not escaped. It is quite likely that in coming days or weeks the renminbi will fall further to set a new post-2008 low against the dollar. How will the People’s Bank of China deal with this powerful market trend?
The US Dollar Wrecking Ball

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The US Dollar Wrecking Ball

Louis-Vincent Gave
26 Sep 2022
In a dangerous world, the reason for the US dollar’s super-charged performance over the last year has been investors’ view that it is the “cleanest dirty shirt” in a smelly pile of laundry. But Louis is not persuaded by this relativist argument.

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The UK Long Shot Gets Longer

Nick Andrews
26 Sep 2022
The market is giving the new UK government's budget no benefit of the doubt. On Monday in Asia, sterling slumped past its February 1985 bottom against the US dollar to set a new record low at US$1.035.

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Video: Opening To What?

Vincent Tsui
23 Sep 2022
Hong Kong is finally moving towards reopening to the wider world, if not yet to mainland China. Yet Hong Kong’s economy and assets are getting squeezed by higher US interest rates imported via the Hong Kong dollar’s peg to the US dollar. In this interview, Vincent examines the different forces at work driving Hong Kong’s macro and markets.

The global view

The US Dollar Wrecking Ball
In a dangerous world, the reason for the US dollar’s super-charged performance over the last year has been investors’ view that it is the “cleanest dirty shirt” in a smelly pile of laundry. But Louis is not persuaded by this relativist argument.
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The Sad Passing Of Queen Elizabeth II
At the end of Elizabeth II’s long reign, Louis ruefully recalls the advice he gave in early 2020 that investors should prefer to hold assets in currencies with the Queen’s head on their banknotes. Given the woeful recent performance of sterling, the loonie, the Aussie and the kiwi, his argument may be looking shaky to some. But on consideration, Louis maintains that those currencies which from now on will display with the King’s head on their banknotes will still offer a better long-term bet for investors.
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Webinar: Global Investment Roundtable, September 2022
Anatole outlined the global growth and inflation outlook, and why financial markets have yet to fully adjust; Charles presented his thinking on the dissolution of the post-World-War-Two order and what this means for assets; and Arthur gave an update on China ahead of the 20th Party Congress.
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The Questions That Matter
Heading into the Jackson Hole symposium, investors are waiting with bated breath on the prepared remarks of Jay Powell to see if the Federal Reserve is sounding hawkish or dovish. But it is worth looking beyond the Fed’s pronouncements to other trends that will dictate the direction of markets.
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Test Your Knowledge
China’s Belt and Road Initiative was meant to expand Beijing’s influence across emerging economies. But lending comes with risks. What share of China’s outstanding overseas loans are to countries now in financial distress?
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Chart of the Week

Week 38, 2022

Week 38, 2022

Emerging markets are a disparate group, but few would have predicted that amid all the ructions in global markets this year Turkey would emerge as the best-performing equity market. The rally has so far mostly been driven by local investors seeking to hedge against inflation which is currently running at around 80%.

Ukraine Fallout

Russia, Do Your Worst
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Who Is Copying Who? Part II
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The Microsoft-ification Of Warfare
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The End Of The Unipolar Era
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World Enters New Liquidity Crisis
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Gas! Gas! Gas!
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Webinar: Into Europe's Winter Of Discontent

Cedric Gemehl, Nick Andrews
21 Sep 2022
With European energy prices for the coming winter up by 500% or more, inflation broadening, and businesses and consumers pessimistic, Europe’s economies are in for a troubled few months. Cedric Gemehl and Nick Andrews discuss what it all means.

India chartbook

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India Macro Update: A Glimmer Of Hope

Udith Sikand, Tom Miller
15 Sep 2022
India’s economy is recovering nicely, even if the latest quarterly growth data showing a 13.5% year-on-year expansion was flattered by favorable base effects. Looking forward, the problem is an adverse external backdrop that is hurting exports and leaving India’s capital markets vulnerable to another risk-off move as global liquidity tightens.

China chartbook

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Macro Update: Confidence Crumbles

Dragonomics Team
26 Jul 2022
China has mostly reopened from the latest wave of mass lockdowns, and manufacturing is back online. But household consumption is subpar and confidence is poor, while the property sector is undergoing its deepest downturn since 2008. In our latest quarterly chartbook, the Dragonomics team explains the changing outlook for the economy and markets.

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Securing The Western Frontier

Tom Miller
China looks like a winner from the US withdrawal from Afghanistan, now free to tighten its grip on Central Asia. In this DeepChina report, Tom explains the complex reality of the latest round of the "great game." China is getting closer to Russia, skeptical of Afghanistan and Pakistan, and consolidating its economic hold on Turkmenistan.

Latest video

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Video: Opening To What?

Vincent Tsui
23 Sep 2022
Hong Kong is finally moving towards reopening to the wider world, if not yet to mainland China. Yet Hong Kong’s economy and assets are getting squeezed by higher US interest rates imported via the Hong Kong dollar’s peg to the US dollar. In this interview, Vincent examines the different forces at work driving Hong Kong’s macro and markets.

Oil & commodities

Brazil’s New China Gambit
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Strategy Monthly: China’s Property Problem
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Who Gets Cheap Energy Tomorrow?
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The Signal And The Noise, Part II
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Webinar: What Next For Emerging Markets?
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Strategy Monthly: The Silver Lining In Emerging Markets
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China tech

The US Runs Faster In The Chips Race
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Chip Investors Are Too Pessimistic
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Plenty Of Friction But No Flames Over Taiwan
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Multinationals Turn Cautious
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London Seminar — March 2022
Better Manufacturing Through Science
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From the archives: oldies but goodies

Deficit Deniers Of The World Unite
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Deficit Deniers Of The World Unite

Anatole Kaletsky
In our politically correct age the pressure to bow down before certain popularly accepted and apparently proven “truths” can be overwhelming. In the aftermath of the US elections, two such nostrums are unnecessarily vexing investors—the urgency of deficit reduction and fear of higher taxes. I believe that both of these obsessions will soon be forgotten.
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Are We Entering into Revolutionary Times?
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Are We Entering into Revolutionary Times?

Louis-Vincent Gave
The role of a society’s elite is to rise to the challenges of the times, and find solutions fitting to those times, even if this involves a radical break with the past. But the modus operandi for most leaders is to try and maintain the status quo. But if the problems are large enough, this does not work, and the same challenges reappear until either a solution is found, the elite is replaced by a new elite, or the country, system or civilization disappears.
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The High Cost Of Free Money
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The High Cost Of Free Money

Charles Gave
Perhaps the most famous economic law is the one that there is no such thing as a free lunch. By keeping US short rates at abnormally low levels beyond the financial crisis and as growth bounces back beyond the dreams of the wildest optimists, the Fed increasingly seems to be trying to ‘feed the US economy for nothing’. This is worrying, for extended periods of cheap money typically come back with a hefty price tag.
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