Latest from Tai Hui
As the US Federal Reserve is unlikely to raise rates soon, Asian central banks’ ability to take the lead is limited. Instead, policies that target credit growth and build buffers to protect the lenders and borrowers can help prevent overheating.
As the US Federal Reserve is unlikely to raise rates soon, Asian central banks’ ability to take the lead is limited. Instead, policies that target credit growth and build buffers to protect the lenders and borrowers can help prevent overheating.
The new US president’s focus will be on taming the pandemic at home, not rolling back Trump’s trade measures against China. But the recovery of the US economy, especially the service sector, is critical to boost the global economy.
The new US president’s focus will be on taming the pandemic at home, not rolling back Trump’s trade measures against China. But the recovery of the US economy, especially the service sector, is critical to boost the global economy.
Over a long horizon, a contrarian investment strategy does not pay off. Instead, it is preferable to bet on trends that look set to stay, such as innovation in the technology sector and policy shifts that support carbon-neutral goals.
Over a long horizon, a contrarian investment strategy does not pay off. Instead, it is preferable to bet on trends that look set to stay, such as innovation in the technology sector and policy shifts that support carbon-neutral goals.
Further fiscal stimulus to support the economy must also be high on Biden’s list of priorities, given that earlier support measures have expired. A divided Congress means he must operate down the middle to gain bipartisan support.
Further fiscal stimulus to support the economy must also be high on Biden’s list of priorities, given that earlier support measures have expired. A divided Congress means he must operate down the middle to gain bipartisan support.
US and European government bonds used to be an insurance policy but now investors are paying a higher price for protection that might not be as effective. Hong Kong’s inflation-linked bonds offer an alternative, while Chinese bonds are drawing international attention.
US and European government bonds used to be an insurance policy but now investors are paying a higher price for protection that might not be as effective. Hong Kong’s inflation-linked bonds offer an alternative, while Chinese bonds are drawing international attention.
Fed’s switch to allowing inflation above 2 per cent means US rates will stay lower for longer, boosting demand for higher yielding bonds, particularly in emerging markets.
Fed’s switch to allowing inflation above 2 per cent means US rates will stay lower for longer, boosting demand for higher yielding bonds, particularly in emerging markets.
Recovery may be delayed but is unlikely to be derailed with more fiscal stimulus coming, low interest rates, targeted lockdowns, and businesses finding creative ways to operate.
Recovery may be delayed but is unlikely to be derailed with more fiscal stimulus coming, low interest rates, targeted lockdowns, and businesses finding creative ways to operate.
Central banks, under pressure to buy assets and keep rates down to support government debt, have promised to keep it temporary to avoid the risks of inflation and capital flight. But unwinding the policy will prove very difficult.
Central banks, under pressure to buy assets and keep rates down to support government debt, have promised to keep it temporary to avoid the risks of inflation and capital flight. But unwinding the policy will prove very difficult.
Governments lifting coronavirus measures and allowing some businesses to resume operations suggests stage one of a global recovery has begun. The second stage will be more challenging with lingering economic damage and US-China trade tensions.
Governments lifting coronavirus measures and allowing some businesses to resume operations suggests stage one of a global recovery has begun. The second stage will be more challenging with lingering economic damage and US-China trade tensions.
While companies will push to diversify supply chains and pay more attention to ESG factors, their preference for globalisation – and the profits it brings – won’t change
While companies will push to diversify supply chains and pay more attention to ESG factors, their preference for globalisation – and the profits it brings – won’t change
The zero-interest rate environment is likely to continue long after the crisis abates and government debt will balloon. Governments will have to make difficult decision on which companies to save, without upsetting the principle of market forces.
The zero-interest rate environment is likely to continue long after the crisis abates and government debt will balloon. Governments will have to make difficult decision on which companies to save, without upsetting the principle of market forces.
The Covid-19 outbreak is holding up production in parts of China, and making relocation a more concrete possibility. However, China’s logistics infrastructure and huge consumer market give it advantages over other production locations.
The Covid-19 outbreak is holding up production in parts of China, and making relocation a more concrete possibility. However, China’s logistics infrastructure and huge consumer market give it advantages over other production locations.
Justifiable fears about a full-scale US-Iran conflict gave markets the jitters, but they quickly calmed down. For investors, the key is to understand whether a particular event will have a sustained impact on the global economy and corporate performance.
Justifiable fears about a full-scale US-Iran conflict gave markets the jitters, but they quickly calmed down. For investors, the key is to understand whether a particular event will have a sustained impact on the global economy and corporate performance.
This month, China’s central bank cut lending rates by just 5 basis points. Unlike during previous slowdowns, the PBOC is keen to avoid flooding the economy with liquidity and starting another boom-bust cycle.
This month, China’s central bank cut lending rates by just 5 basis points. Unlike during previous slowdowns, the PBOC is keen to avoid flooding the economy with liquidity and starting another boom-bust cycle.
History shows that 68 per cent of incumbent presidents get re-elected. So Donald Trump is likely to stay, the division between the House and the Senate is likely to continue, as are US-China tensions.
History shows that 68 per cent of incumbent presidents get re-elected. So Donald Trump is likely to stay, the division between the House and the Senate is likely to continue, as are US-China tensions.
Central banks like the Fed and ECB can hit the accelerator of policy easing all they like but the moribund global economy can only gain traction if governments start spending and geopolitical tensions ease.
Central banks like the Fed and ECB can hit the accelerator of policy easing all they like but the moribund global economy can only gain traction if governments start spending and geopolitical tensions ease.
A greater diversity of investors minimises volatility and subjects Chinese markets to greater scrutiny, strengthening them in the long run. In return, Chinese investors with greater access to overseas markets could diversify their portfolios and bring best practices home.
A greater diversity of investors minimises volatility and subjects Chinese markets to greater scrutiny, strengthening them in the long run. In return, Chinese investors with greater access to overseas markets could diversify their portfolios and bring best practices home.
About one-third of developed-market government bonds are trading at negative yields now. This essentially means paying a government for the privilege of borrowing money from it. But some believe bonds can still deliver capital gains.
About one-third of developed-market government bonds are trading at negative yields now. This essentially means paying a government for the privilege of borrowing money from it. But some believe bonds can still deliver capital gains.
Recent parliamentary debacles show Britain has reason to doubt Boris Johnson’s promise of a clean break from the EU.
Recent parliamentary debacles show Britain has reason to doubt Boris Johnson’s promise of a clean break from the EU.
Politicians are promising to spend more or cut taxes to woo voters give central banks little wiggle room if the economy overheats. Investors will have to work hard to seek income in high-yield bonds, high-dividend equity or alternative assets.
Politicians are promising to spend more or cut taxes to woo voters give central banks little wiggle room if the economy overheats. Investors will have to work hard to seek income in high-yield bonds, high-dividend equity or alternative assets.
It looks like a return to the downbeat days of 2018, except this time around, central banks’ willingness to keep monetary policy loose could signal hope for investors
It looks like a return to the downbeat days of 2018, except this time around, central banks’ willingness to keep monetary policy loose could signal hope for investors
The stability of the global financial system depends on the sound policies of an independent Fed. The president’s criticism and the push by some Democrats for a monetary system that would undermine the Fed’s role are unwise.
The stability of the global financial system depends on the sound policies of an independent Fed. The president’s criticism and the push by some Democrats for a monetary system that would undermine the Fed’s role are unwise.
The Federal Reserve has declined to commit to additional rate hikes because inflation hasn’t accompanied US growth. If that changes, though, the pain could be serious.
The Federal Reserve has declined to commit to additional rate hikes because inflation hasn’t accompanied US growth. If that changes, though, the pain could be serious.
The Fed has slowed its rate hikes, while there’s no sign of any monetary tightening at the BOJ and ECB for now. This could be good news for Hong Kong and risk assets, at least in the short term
The Fed has slowed its rate hikes, while there’s no sign of any monetary tightening at the BOJ and ECB for now. This could be good news for Hong Kong and risk assets, at least in the short term
The EU has a headache on its hands this year with Brexit, fiscal discipline and mass protests, on top of volatile parliamentary elections in May. Even so, there are quality companies that are less sensitive to market volatility.
The EU has a headache on its hands this year with Brexit, fiscal discipline and mass protests, on top of volatile parliamentary elections in May. Even so, there are quality companies that are less sensitive to market volatility.
Now more than at any time in the past few years, central bankers will need to scrutinise and respond closely to evolving economic data, and be aware any miscommunication could adversely affect economic growth.
Now more than at any time in the past few years, central bankers will need to scrutinise and respond closely to evolving economic data, and be aware any miscommunication could adversely affect economic growth.
A survey of the regional outlooks shows economic fundamentals remain stable going into a new year, though risks will persist. As has been the case this year, the complex mix of geopolitical tension and economic challenges specific to the region will keep investors on their toes.
A survey of the regional outlooks shows economic fundamentals remain stable going into a new year, though risks will persist. As has been the case this year, the complex mix of geopolitical tension and economic challenges specific to the region will keep investors on their toes.
Tai Hui says a weaker US dollar, resumption of dialogue between the US and China on trade, and more stimulus from China could turn the gloomy sentiment on Asian equities around.
Tai Hui says a weaker US dollar, resumption of dialogue between the US and China on trade, and more stimulus from China could turn the gloomy sentiment on Asian equities around.
The global economy is showing decent momentum, and the US economy has become more stable. The next recession is more likely to resemble the mild ones of 1990 and 2001 than the 2008 monster.
The global economy is showing decent momentum, and the US economy has become more stable. The next recession is more likely to resemble the mild ones of 1990 and 2001 than the 2008 monster.
As tech companies will face challenges in the near future, investors should temper expectations and focus on firms with a broad range of businesses.
As tech companies will face challenges in the near future, investors should temper expectations and focus on firms with a broad range of businesses.