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Gavekal Research
Anatole Kaletsky
May 10th 2021
A Post-Brexit Britain
Some long-term investors do seem to be worried that a breakup of the United Kingdom could add another element of uncertainty to what I described last year as the “triple whammy” of Brexit, Covid and the British Treasury’s surprising flirtation with tax increases and premature fiscal tightening. It now appears, however, that only one of these concerns is really justified.
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Gavekal Dragonomics
Ernan Cui
May 07th 2021
Coming Home For The Holidays
The number of tourists over China’s five-day Labor Day holiday recovered to 3.2% above 2019 levels, according to the Ministry of Culture & Tourism, although tourism revenue was still 23% below 2019. In this Quick Take, Ernan outlines explains what renewed confidence in domestic travel means for China’s services recovery.
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Gavekal Research
Tom Miller
May 07th 2021
The Global Pivot To The Indo-Pacific
The Indo-Pacific is at the heart of global geopolitics today. The US, UK, and European Union are all shifting their attention east. Tom argues that the new treatment of the Indian and Pacific Oceans as a single, connected space reflects a key shift in managing China’s regional power. The impact will be felt in both strategic and economic terms.
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Gavekal Research
Tom Miller, Udith Sikand
May 07th 2021
India Is Running Out Of Road
After Mumbai and Delhi, Bengaluru is the latest big Indian city to face a second wave of Covid infections. India’s underfunded health system is collapsing, as we feared it could a year ago. Yet markets are shrugging off the crisis: equities are flat, the rupee resilient. Tom and Udith investigate whether this disconnect is likely to persist.
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Gavekal Research
Udith Sikand
May 07th 2021
Video: The Economic Impact Of India's Second Wave
If India's latest Covid wave peaks in the next few weeks, economic catastrophe can be avoided. However, India does not have much policy space in which to operate, so the counter scenario of new and more virile mutations driving a worsening outbreak does mean that hitherto stoic local investors could yet throw in the towel on Indian risk assets.
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Gavekal Research
Will Denyer, Anatole Kaletsky, Louis Gave
May 07th 2021
Webinar: Global Investment Roundtable, May 2021
Joe Biden's enormous fiscal initiatives mark a potential sea change in the US government’s role in the economy. They may yet get watered down as the US president negotiates with more conservative members of his party, but tax and spend is clearly the new mantra in Washington DC. The question for investors is what this means for assets in the US and around the world.
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Gavekal Research
Louis Gave
May 06th 2021
The US Doesn’t Need A Wealth Tax
Louis had feared that the US would follow France in imposing a wealth tax on its citizens. But it turns out it doesn't have to, as the US is now embracing a combination of economic policies that seem set to destroy the capital base of rich Americans. This will have implications for asset holders and the value of the US dollar.
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Gavekal Research
Will Denyer, Tan Kai Xian
May 06th 2021
The Changing State Of US Liquidity
When it comes to creating and distributing US money, there are three main players: the Federal Reserve, the US Treasury and commercial banks. Recent events call for a status update on the prospects for money flows from each, and what it all means for the bond market.
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Gavekal Research
Will Denyer
May 05th 2021
Fighting The Fed Over Wages
Recent rollbacks of Covid restrictions in the US should spur consumer demand, adding to an inflationary brew. Most policymakers continue to claim such pricing pressure is “transitory”. Perhaps, but the employment cost index shows US wages having accelerated for the last two quarters and the balance of evidence points to this uptrend continuing.
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Gavekal Dragonomics
Rosealea Yao
May 05th 2021
The Steel Price Squeeze Is Here To Stay
China’s iron and steel prices have broken through their post-financial crisis highs, the result of strong domestic demand, constrained international supply and government plans to curb steel production. In this report, Rosealea explains why prices are likely to remain elevated but slowing demand growth should keep them from rising further.
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Gavekal Research
Louis Gave, Cedric Gemehl, Didier Darcet
May 05th 2021
Webinar: French-Language Webinar, May 2021
As the US and Europe begin to emerge from the pandemic, Louis assesses the key relationships in global markets, Cedric asks whether Europe will have a summer this year and what the economic effects will be and Didier presents the “Yellow Jacket” multiplier, as he introduces a new asset allocation tool.
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Gavekal Dragonomics
Dan Wang
May 04th 2021
Biden's Tech War
The US has changed generals in its tech war against China, but that has not brought a respite in the campaign. President Joe Biden is deploying many of the same sanctions used by the Trump administration, while also looking to invest in extending the US technological lead. In this piece, Dan surveys the state of play in the US-China tech war.
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Gavekal Research
Udith Sikand
May 04th 2021
Japan’s Big Bets
Yoshihide Suga’s stodgy record does not suggest he is in the mold of relative political mavericks, yet in recent days, he has taken some punchy policy decisions that signal he is not just a caretaker but has serious political ambitions. Global investors who overlooked Japan in recent years due to the lack of a compelling narrative may want to pay attention.
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Gavekal Research
Vincent Tsui
May 04th 2021
The Broader Risk Of Semiconductor Shortages
Today’s semiconductor supply constraints are structural in nature, and affect many industries, not just automobile production. In this piece, Vincent argues that if chip shortages start to cause cascading disruption along the Asian electronics value chain, the region's export engine may stall. In turn, that will cast doubt on the strength of Asian equities and currencies.
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Gavekal Research
Andrew Batson
May 03rd 2021
Strategy Monthly: China’s Multi-Dimensional Tightening
China’s economic policymakers are using the space afforded them by a rapid economic recovery from the pandemic to refocus on a longer-term effort to redirect resources for strategic and political purposes. The immediate effect is a multi-faceted tightening across many sectors. For investors, this effort may upend old uncertainties and create new risks.
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Gavekal Research
Cedric Gemehl
May 03rd 2021
Fighting Europe’s Headwinds
Last Thursday, Nick Andrews and I argued that Europe’s economic recovery is set to defy dire predictions. The fly in the ointment, we argued, was a weakening in Europe’s hitherto robust manufacturing sector. Such concerns deepened on Friday, as more evidence emerged of slowing industrial activity. So does this headwind need to be taken more seriously?
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Gavekal Research
Louis Gave
Apr 30th 2021
India’s Outbreak
A year ago, the world’s media were focusing on heaps of bad Covid news in the US and Europe. Unsurprisingly, global risk assets did not like it: equities collapsed, the WTI oil price fell into negative territory, and OECD government bond yields fell to new lows. Fast forward a year, and the reporting from India is even more apocalyptic, yet, markets are brushing off the bad news.
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Gavekal Research
Will Denyer, Yanmei Xie
Apr 30th 2021
Webinar: Biden Ups The Ante On Tax And Spend
President Joe Biden has said that the US will make sweeping cuts to carbon dioxide emissions and impose tax hikes on the wealthy. For now, the US economy is recovering, but can this continue if risk takers pull in their horns as they will get less of the rewards?
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Gavekal Dragonomics
Thomas Gatley
Apr 29th 2021
The Meteoric Rise Of Mutual Funds
The size of China’s equity mutual-fund industry has doubled over the past year, a sharp rise driven by policy shifts and strong performance. While fund performance and fundraising has suffered in 2021, Thomas argues that mutual funds can still help increase the role of institutional investors in China’s volatile, retail-dominated equity markets.
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Gavekal Research
Charles Gave
Apr 29th 2021
How To Make The Rich Properly Rich
On Monday Charles argued that abnormally low interest rates act to make the poor poorer and the rich (seemingly) richer. Armed with this conviction he worked with our quant team in Paris to look more closely at the impact of such a monetary policy on holders of equities, discovering a decision rule which enhances equity returns and protects against drawdowns.
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