Gavekal Research

Udith Sikand

Mar 14th 2018

Three years ago Malaysian prime minister Najib Tun Razak faced the kind of graft allegations that would ultimately defenestrate heads of government in Brazil and South Africa. His political fortunes were further imperiled by Malaysia’s highly trade-dependent economy staggering trough the 2014-15 commodity bust. Yet, remarkably, Najib survived and now seems set to be reelected at an upcoming general election. His Houdini-like escape is bad for...

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Joyce Poon

Mar 01st 2018

The best performing currency in the world so far this year is... the Japanese yen. Over the first two months of 2018, the yen has climbed 5.5% against the US dollar, remaining well bid even as the US dollar itself has found support in recent days. At the same time, the Japanese equity market has taken a beating, falling -4.3% in local currency terms over the year to date. As a result, even though Japanese stocks are still up in US dollar terms...

Gavekal Research

Udith Sikand, Tom Miller

Feb 27th 2018

Indian growth in the fiscal year ending March 31 should top 7%, before accelerating to nearer 7.5% in FY18-19. Yet Indian equities failed to rebound with other emerging markets after this month’s correction, and the rout in bonds since last summer is continuing. In the latest edition of Gavekal’s India Macro Update Udith and Tom assess what this muddled picture means for investors.

Gavekal Research

Udith Sikand

Feb 21st 2018

As most emerging equity markets have clawed back a good portion of the losses they suffered in early February’s risk-off, there has been one notable exception. Far from rebounding, Indian stocks have taken another leg down following revelations of a US$1.7bn fraud at Punjab National Bank, the country’s second-largest state-owned lender. The scale of the fraud—roughly twice the amount promised to the bank by the government in the first tranche of...

Gavekal Research

Joyce Poon

Feb 15th 2018

The market correction of the last two weeks has been centered on the US, but also hit emerging markets pretty hard. A year ago, I argued that the sustainability of the EM run-up depended on continued strong global growth, more oil price gains and a further fall in tail risks associated with the financial system. The issue is whether the newly volatile conditions in global markets are a game-changer for the emerging world. That conundrum depends...

Gavekal Research

Louis Gave

Feb 09th 2018

“A week is a long time in politics”, Harold Wilson was said to have once quipped to a young aide. The former British prime minister should have tried working in the US equity market. In recent days, it has sometimes felt as if time stood still. So what should we make of stocks’ inability to mount a rally after they again closed on their lows?

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Tom Miller

Feb 02nd 2018

New Delhi swung into election mode yesterday, a full 15 months before the election. Finance minister Arun Jaitley pledged his budget for 2018-19 would build a “New India,” but it was really a populist ploy to buy votes. After a tough economic year and a disappointing election result in Modi’s home state of Gujarat, the ruling BJP needed to shore up its core support.

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Tom Holland

Jan 25th 2018

If Robert Rubin were dead, he would be turning in his grave. Speaking in Davos yesterday, US Treasury secretary Steven Mnuchin shook markets by declaring: “A weaker dollar is good for us.” His remark broke the precedent set by Rubin in 1995 and adhered to by Treasury secretaries ever since, of insisting: “A strong dollar is in the best interest of the US.”

Gavekal Research

Tom Miller

Jan 18th 2018

Forty years after the Southeast Asia Treaty Organization was dissolved, Tom argues that an expanded version of that “Asian NATO” concept may be developing, but this time the potential theater of operations stretches across the Indo-Pacific and includes the full panoply of great powers. What has not changed is that China remains the protagonists’ key bogeyman.