China

Tactical Asset Allocator: lessons learnt from investing in ‘star’ economies

This is the last write-up on the tactical asset allocator portfolio, which has been running since 2013. The investment brief was to be cautious and diversified across asset classes, using exchange traded funds wherever possible, and to avoid being down across all holdings at any one time.

While the portfolio has only doubled in size over the five years since its inception, it has never been down by more than a few percent month on month, although the publication-date constraints of having to deal on one set day per month has limited its agility.

Tactical Asset Allocator: China powerhouse offers pocket of opportunity

The S&P 500 index has risen by about 80% over the past decade, but stockmarkets in the rest of the developed world remain 25% below their levels before the financial crisis. Some 15% of that decline has occurred since the peak in January last year. This bifurcation is odd, since the only real economic growth has been generated by emerging powerhouses such as China, whose GDP has grown by nearly 250% over the past decade.

Tactical Asset Allocator: trade detente sets up market for rally

The rally in the first quarter lifted the US and other markets to a six-month high, while sovereign bond prices have mirrored investors’ renewed confidence by tumbling from their recent two-year peak. The uber-pessimism of the fourth quarter of 2018 has turned into fresh hope that gains can be made when trade wars and Brexit have been pushed out of the way.

Why now is a good time to add some more exposure to emerging markets

One of the reasons 2018 turned out to be such a disappointment for equity investors was the underwhelming performance of the Chinese economy, the ramifications of which were felt as far afield as Germany.

While most equity markets had a rough year, the performance of emerging markets and eurozone stocks were among the worst. So for 2019, some of the most important questions facing investors are what caused the slowdown in China last year and when the economy is likely to bounce back.

Prepare for the bear: the factors set to trigger the next recession

The economist Paul Samuelson once joked that the stockmarket has predicted nine of the past seven recessions. But while the over-reactive nature of equity market investors and their poor predictive powers ring true, there is nonetheless a clear link between economic and market performance, at least in advanced economies.

Six adventurous single-country fund ideas

The Bric group of countries (Brazil, Russia, India and China) captured investors’ imagination back in 2001 when Goldman Sachs’ chief economist at the time, Jim O’Neill, coined the term. This new investment theme spawned a raft of fund launches, and investors piled in. Then in 2010 South Africa joined the group to turn Bric into Brics.