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Weekly Bond Bulletin: Welcoming volatility

By GFICC Investors
On the surface, several fixed income sectors appear to have seen a correction or perhaps a reversal of a trend. However, looking through the noise shows that the recent market weakness was primarily driven by idiosyncratic events.
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The Year Ahead | 2018

By Tai Hui
This paper spotlights the 2018 investment landscape that investors should monitor to formulate an informed and rational view.
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Weekly Bond Bulletin: Drilling down into oil currencies

By GFICC Investors
The recent rally in oil prices has not been accompanied in most cases by stronger oil currencies. In this week’s Bond Bulletin we delve into the main factors driving oil price and currency performance, and look at which currencies appear best positioned in the current environment.
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Monthly Market Review - November (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - November (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review – November

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Weekly Bond Bulletin: Are we at the right dip yet?

By GFICC Investors
Emerging market local currency has been one of our preferred asset classes for some time. Does a recent dip in performance indicate a shift from the positive goldilocks scenario for emerging markets?
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Weekly Bond Bulletin: Risk-on rolls on

By GFICC Investors
The market optimism that followed Donald Trump’s election has returned with the passing of the Senate budget resolution. The strength of markets so far this year, coupled with the usual year-end derisking trend, may suggest that caution is warranted—but signs currently point to a persistence of positive momentum.
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Factor Views 4Q 2017

By Yazann Romahi
Synchronized global economic growth continues to support equity markets, but uncertainty around the outcome of mone­tary and fiscal policy led to a mixed quarter across our range of factors.
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Quality over quantity: Investment implications of China’s new economic policy

By Marcella Chow, Chaoping Zhu, Hannah Anderson
This paper, written by Marcella Chow, Chaoping Zhu, and Hannah Anderson, discusses the evolution of China’s economic policy after the 19th National Party Congress and how it impacts our view on Chinese equities.
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Weekly Bond Bulletin: European showdown: High yield vs. loans

By GFICC Investors
Diverging fundamentals in the European high yield and leveraged loan markets are strengthening the case for high yield, which continues to look attractive despite tight spreads.
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Global Equity Views 4Q 2017

By Paul Quinsee
It remains a good environment for equity investing–although higher valuations make us more cautious. We see more upside in emerging markets, Europe & Japan vs. the U.S. Among the potential risks: the traps of investor complacency & excessive risk-taking.
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Weekly Bond Bulletin: Inflation Implications

By GFICC Investors
Strong global economic growth and tight labour markets are putting pressure on wages. Are we about to see a pick up in inflation, and if so, what will be the impact on central banks and fixed income markets?
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Monthly Market Review - October (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - October (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Emerging market debt strategy : Follow the growth

By Pierre-Yves Bareau
Emerging market (EM) debt continues to be in a sweet spot, supported by stagnating global inflation, supportive developed market (DM) growth pick-up, strong fundamentals and few external risks.
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Monthly Market Review – October

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Weekly Bond Bulletin - Looking beyond the hedges

By GFICC Investors
Rising US interest rates are contributing to a spike in US dollar hedging costs. This presents a challenge for euro and yen investors in particular, but also creates opportunities for active managers given the macro backdrop remains broadly supportive for fixed income assets.
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Weekly Bond Bulletin: Technically speaking

By GFICC Investors
With fundamentals strong and valuations looking more stretched, technicals remain a major driving force for global bond markets.
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Global Fixed Income Views 4Q 2017

By Bob Michele

Don’t fight the Feds. For the near term, aggregate central bank balance sheet expansion remains a tailwind. With real rates compressed and asset classes fully priced, we seek relative value:  U.S. high yield, European bank capital & EM local currency debt.

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Weekly Bond Bulletin: Debating the yield curve

By GFICC Investors
The US Treasury curve has flattened over the course of this year, with the difference between two-year and 10-year yields currently at 0.84% (as of 19 September). As we embark on the process of central bank balance sheet normalisation, we look at whether the yield curve may continue to flatten, as would be expected when rates rise, or if we could begin to see a steepening effect.
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Principles for a successful retirement (Taiwan Traditional Chinese)

By Wina Appleton
This booklet presents eight essential retirement planning principles toward a successful retirement.
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Global Asset Allocation Views 4Q 2017

By John Bilton

Asset allocation for a world of continued global growth -  Amid a synchronized pick-up in global growth and loose financial conditions, we maintain a pro-risk tilt in our asset allocation. Rates are set to rise, but only slowly, so we maintain a small underweight to duration together with a modest overweight to stocks, diversified across regions. We remain neutral on credit.

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Weekly Bond Bulletin: EM corporates on the up

By GFICC Investors
As emerging market (EM) growth continues, a combination of favourable factors is working to the advantage of the high-yield corporates at the heart of the EM universe.
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Monthly Market Review - September (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - September (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - September

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Weekly Bond Bulletin: Comparing apples with oranges

By GFICC Investors
US and European high yield bonds have performed well year-to-date, with total returns at 5.90% and 5.09%, respectively (as of 30 August 2017). Despite these strong returns, we believe high yield remains an enticing asset class for investors—though it’s critical to understand the nuances between the US and European markets.
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Weekly Bond Bulletin: Strategies for the dog days

By GFICC Investors
When caught in the doldrums, the only strategy is to wait, and stay alert for changing winds. With most bond indices idling in these dog days of summer, the US investment grade credit market may present a near-term opportunity.  
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Evolving expectations for infrastructure investing

By Serkan Bahceci
Infrastructure remains an attractive asset class for institutional investors given its low correlations to other asset classes, relatively high yields, and the positive outlook for investor demand.
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Tackling China’s debt mountain needs more than SOE reform

This paper examines what China's continued efforts to clean-up corporate balance sheets, especially of State-Owned Enterprises, mean for investors.
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Looking to buy on dips

By Pierre-Yves Bareau
EM countries and companies have become more resilient to external and internal shocks and we therefore see market dips and corrections as potential opportunities to buy.
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Investing in investment: Capex and financial markets

By Michael Hood
Why has U.S business investment spending grown slowly during the current expansion vs. previous cycles, and apparently weakened on a secular basis? And does the future hold more weak capital expenditure (capex), which could weigh on productivity growth, manufacturing activity, equity markets and long-term interest rates?
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Weekly Bond Bulletin: China churns along

By GFICC Investors
With the outlook for the Chinese economy continuing to be a key driver of investor sentiment, we take a look at the latest Chinese data releases and examine the likely impact on global growth and on fixed income markets.
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Goldilocks and the three risks

By George Iwanicki
Emerging markets are in the early phase of their recovery cycle. When comparing cycle-adjusted P/E multiples, emerging market equity ranks as the cheapest segment of the global equity market.
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The Bank of England votes to keep rates on hold… for now

By Michael Bell
The Bank of England (BoE) voted 6—2 in favour of keeping interest rates on hold at 0.25%, but indicated that rates may have to rise faster than the two rate rises the market had been anticipating over the next three years.
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Monthly Market Review - August

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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HK-China Bond Connect: Opening up diversification opportunities

By Robert Stewart, Stephen Chang
This paper, written by Stephen Chang, Jason Pang and Robert Stewart, analyzes how the Hong Kong-China Bond Connect scheme increases the appeal of China onshore bonds by opening up diversification opportunities and improving the prospects for wider inclusion of the bonds within global indices.
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Monthly Market Review - July (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - July (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Weekly Bond Bulletin: Marking monetary policy to market

By GFICC Investors
Markets have moved in response to a more hawkish tilt in global central bank rhetoric, but is this transitory or a sign of shifting trends? Investors need to decide which is more important for asset markets: monetary policy or the underlying state of the recovery.
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Monthly Market Review - July

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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3Q 2017 Guide to the Markets and Quarterly Perspectives

Introducing our third quarter 2017 Guide to the Markets and Quarterly Perspectives. A comprehensive array of market and economic trends illustrated with clear and compelling charts.
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Monthly Market Review - June (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - June (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - June

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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What if May falls in June?

By Michael Bell
The market is currently assuming that the Conservatives will win a large majority and eventually deliver a relatively hard Brexit, but that the election will make it easier for them to agree to a transitional arrangement, prolonging single market access for two or three more years after March 2019.
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MSCI China A-share inclusion update: 4th time lucky?

By Ian Hui
This paper examines China's A-Shares' possible inclusion in MSCI's benchmark indices in June and the result's impact on the market.
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Political risk in Europe has fallen

By Michael Bell, Vincent Juvyns, Tilmann Galler
2017 was billed as a year of potential political turmoil for the eurozone. Investors feared that elections in the Netherlands, France and Germany could lead to a victory for an anti-euro party plunging the very future of the eurozone into doubt
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Political uncertainty and market turmoil in Brazil

By Gabriela Santos
After a report was published late Wednesday night implicating interim President Temer in a bribery scandal related to Operation Car Wash, opposition politicians called for his impeachment or resignation, resulting in Brazilian markets opening starkly down on Wednesday.
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Monthly Market Review - May (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - May (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Investing in Emerging Markets: Why EM and which EM?

By Gabriela Santos
Gabriela Santos discusses the improving Emerging Market conditions and how investors should consider whether they have appropriate exposure to this EM rebound.
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Asian exports: Building momentum

By Tai Hui, Hannah Anderson
This paper examines the recent upturn in Asian exports and considers what this recovery implies for corporate profits and investing in Asian equities.
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No change in monetary policy as inflation looms

The Bank of England’s Monetary Policy Committee (MPC) decided to maintain its policy rate at 0.25% and continue its policy of purchasing government and corporate bonds.
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Rethinking income investing amid rising rates

By Michael Schoenhaut, Talib Sheikh, Leon Goldfeld
This paper, written by Michael  Schoenhaut, Talib Sheikh, Leon Goldfeld and Yuejue Jin, analyzes how an active and flexible approach to income investing, which balances risk with return, can serve investors well amid rising interest rates.
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Macron conquers, but France remains deeply divided

By Vincent Juvyns, Stephanie Flanders
Vincent Juvyns, Global Market Strategist, gives us the latest update on the French Presidential Elections and impact this has on investors.
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Monthly Market Review - May

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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1Q 2017 earnings update: The recovery continues

By David Lebovitz
Given our view that the economy should continue to expand at a moderate pace, wage growth will gradually accelerate and interest rates will drift higher, it seems reasonable to expect that S&P 500 earnings will continue to rise over the remainder of 2017. For investors, we believe the prudent strategy is to follow the cash flows, and invest in those companies that are able to grow their earnings against the economic backdrop described previously.
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The two-horse race that the polls predicted

By Vincent Juvyns, Stephanie Flanders
The 2017 French presidential election has been the most uncertain in the history of the Fifth Republic. But on this occasion, the opinion polls turned out to be right, with centrist Emmanuel Macron and Front National leader, Marine le Pen, both proceeding to the second round.
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Monthly Market Review - April (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - April (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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May calls for June election

Theresa May announced her intention to call an early general election for Thursday 8 June. She made it clear that this election would be about her approach to Brexit, saying current divisions within Westminster jeopardise the UK’s negotiating position with the EU, which she wants to strengthen.
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Emerging Market Debt Q2 2017: Reflation takes root

By Pierre-Yves Bareau
Given the risks posed by protectionism, we are more cautious on open economies and those more dependent on external funding. Overall, we have shifted our focus from market beta to carry this quarter, coming off of solid first quarter performance, tighter valuations and the little market premium attached to the risks we have identified. We place an emphasis on short-end names and those idiosyncratic stories that we identify as having positive event skew.
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Monthly Market Review - April

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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2Q17 Principles for successful long-term investing

By Tai Hui
This presentation uses select slides from the Guide to the Markets - Asia, to explain key investment principles.
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Inflation's next phase

By Benjamin Mandel, Michael Hood
For investors, the recovery of inflation and inflation risk premia, against the backdrop of anchored inflation expectations, imply a supportive environment for risk assets. Our outlook suggests continued upward pressure on the market pricing of inflation, manifesting in higher bond yields and a widening spread between nominal and inflation-protected bonds.
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European politics update: Stopping populism in its tracks?

By Vincent Juvyns
The Centre-right victory in the Netherlands and the rise of Emmanuel Macron in the polls for the French presidential elections both give some reassurance to investors that populist forces are not about to reignite the eurozone crisis, nor derail the recovery under way in European markets.
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Less low rates

By Dr. David Kelly, Ainsley Woolridge
This paper addresses the FOMC's March meeting announcement.
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Monthly Market Review - March (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - March (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - March

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Fed's balance sheet "diet" should not limit appetite for EM assets

By Kerry Craig, Hannah Anderson
This paper addresses concerns about the Federal Reserve's balance sheet and emerging market investing.
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European equities: Q4 earnings review and outlook for 2017

By Alex Dryden
The fourth quarter of 2016 looks to have been a strong one for European equity earnings. With 72% of companies having reported, we estimate that Q4 2016 earnings per share growth was 9.3% year-on-year for the Euro Stoxx 600.
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The European political project at a crossroads?

By Vincent Juvyns, Tilmann Galler, Maria Paola Toschi
Twenty-five years after the signing of the Maastricht treaty, the European political landscape is more fragmented and polarised than ever, in a year when key member states are facing general elections.
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New challenges for Emerging Markets: Risk or opportunity?

By George Iwanicki
The unexpected election of Donald Trump as U.S. President sparked dramatic change across the global investing landscape - and Emerging Markets were hardly immune.
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Monthly Market Review - February (Taiwan traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - February (Hong Kong traditional Chinese)

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Monthly Market Review - February

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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4Q16 earnings update: Follow the earnings

By David Lebovitz
This bulletin highlights the fourth quarter earnings season and outlines our outlook for earnings heading into 2017.
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BoE keeps rates on hold and options open

By Nandini Ramakrishnan
The Bank of England (BoE) leaves monetary policy unchanged, increases UK growth for the year and will monitor rising inflation.
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UK GDP: Continued strong growth numbers 

By Alex Dryden
With the economy growing at 2% and inflation hitting a 30-month high in December, the Bank of England is in a tough spot. In normal times, strong economic growth and higher inflation would lead to tighter monetary policy.
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Weekly Bond Bulletin: An eye on supply

By Nick Gartside, Travis Spence, Marika Dysenchuk
The robust improvement in growth dynamics that began in the US at the end of last year now appears to have taken hold globally—but government bond yields have barely moved. A look at supply helps us understand why this might be the case.
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Entering the reflation era

By Pierre-Yves Bareau
We are entering a new investment paradigm: the era of "lower for longer" and "search for yield" has now been replaced by an era shaped by higher growth, inflation and rates.
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Monthly Market Review - January

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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1Q17 Principles for successful long-term investing

By Tai Hui
This presentation uses select slides from the Guide to the Markets - Asia, to explain key investment principles that financial professionals can use.
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Weekly Bond Bulletin: Making growth and inflation great again

By Bob Michele, Nick Gartside, Travis Spence
Donald Trump’s US election victory has dramatically altered the outlook for growth and inflation and, ultimately, for global fixed income. Which sectors will feel the pressure—and which stand to benefit?
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ECB to reduce QE from April 2017

By Michael Bell
The ECB has decided that the risk of deflation in the eurozone has “largely disappeared.” As a result, it has decided to reduce the amount of QE purchases to EUR 60 billion a month.
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Weekly Bond Bulletin: Searching for the European spark

By Bob Michele, Nick Gartside, Travis Spence
Uncertainty around the Italian referendum and the European Central Bank (ECB) meeting served as a reminder that political and policy uncertainty are holding back eurozone assets.
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Monthly Market Review - December

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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Italy opts for the status quo

By Maria Paola Toschi
With a high level of turnout (68%) and a huge gap in favour of the NO supporters (60% against 40%) Italy has rejected Constitutional reform. As a result the Prime Minister Matto Renzi announced the intention to resign opening a period of political uncertainty.
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Possible U.S. election implications for emerging markets: Down but not out?

By Gabriela Santos
This paper considers the effects of Trump's potential policies on U.S. asset performance and implications for emerging market economies and markets.
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Political headwinds continue to trouble Europe

By Maria Paola Toschi
The impact on Europe of the UK’s vote to leave the European Union (EU) remains unclear, and other landmark events are now looming large on the political horizon. Italy’s major Constitutional referendum, scheduled for 4 December, could have a direct impact on the country’s political future.
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A guide to US government

By Nandini Ramakrishnan
As the US headed to the polls on 8 November 2016, markets were expecting a Hillary Clinton (Democrat) victory. Instead, on 9 November, Donald Trump (Republican) was elected to serve as the 45th US President of the United States.
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U.S. elections: A populist victory

In the long-run, investors would do well to make sure that they are well diversified outside of U.S. stocks and bonds and that they have sufficient exposure to alternatives and international securities.
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Follow-through on the earnings turn

By George Iwanicki
In the third quarter, emerging market (EM) earnings and earnings expectations cycles finally began to turn. Reported profits and margins rebounded off their cyclical lows and earnings estimates moved out of negative territory, diminishing a headwind that had weighed on performance from 2011 through 2015.
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The party isn’t over, but it’s getting late: Shifting focus from monetary to fiscal policy

By Dr. Jasslyn Yeo
This paper examines the potential impact on developed market versus emerging market assets, as the focus shifts from monetary policy to fiscal policy as an engine of developed market growth.
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4Q 2016 Solving for fixed income

By Tai Hui
This presentation uses select slides form the Guide to the Markets - Asia to examine how the current environment has affected fixed income's traditional role and the many opportunities we see to achieve its traditional objectives.
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Timing retirement: A guide to determining when, and how, to retire

By Tai Hui, Katherine Roy
This paper evaluates the six key risks that all investors should consider when transitioning to retirement.
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Monthly Market Review - October

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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4Q Principles for successful long-term investing

By Tai Hui
This presentation uses select slides from the Guide to the Markets – Asia, to explain key investment principles that financial professionals can use.
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The not-quite-new era for the Bank of Japan

By Ian Hui
This paper examines the monetary policy decision made by the Bank of Japan at its recent September meeting and the implications to investors.
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An election of extremes–but a government of moderation

In the midst of a unique U.S. election season, this bulletin filters through the noise and explains how long-term investors should view the 2016 election.
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Europe's recovery after Brexit and what it means for investors

By Vincent Juvyns, Alex Dryden, Nandini Ramakrishnan
As an investor, it is essential to look through the political noise to see that the economic environment is improving in the region. While uncertainty is expected to persist, European financial markets still offer a number of attractions to investors, namely attractive valuations and dividend yields in the equity space, and both risk-adjusted returns and support from the ECB in fixed income markets.
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3Q 2016 Solving for fixed income

By Tai Hui
This presentation uses select slides form the Guide to the Markets - Asia to examine how the current environment has affected fixed income's traditional role and the many opportunities we see to achieve its traditional objectives.
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Chinese yuan: Walking on a tight rope

By Ian Hui, Tai Hui
This paper examines the Chinese yuan depreciation trend and its implications for global and yuan-based investors.
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U.S. employment report – A picture of health

By David Lebovitz
This paper reviews the July U.S. employment report and its implications for the economy’s outlook.
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Monthly Market Review - August

By Tai Hui
We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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U.S.: The risk of recession…(and how to be prepared for one)

By Dr. David Kelly
This paper reviews the likelihood of a U.S. recession and highlights how hypothetical portfolios might fare in such an environment.
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Emerging markets after Brexit

By George Iwanicki
This paper, written by George Iwanicki, discusses whether political surprise in developed markets should favor entrance into emerging market equities.
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China: Stabilizing growth signs, but momentum to fade in the 2H

By Marcella Chow
A review of the latest June China data and the potential implications.
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Emerging market debt strategy: On the road to recovery

By Pierre-Yves Bareau
This paper analyzes the emerging market debt sectors and its strategic implications over the coming quarter.
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Safety in the new normal

An anchor is stable. It holds the ship in place as the wind and waves threaten to drag the vessel towards the rocks. In times past, investors have relied on a single asset strategy to anchor the portfolio: domestic government bonds.
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Market Bulletin: Monthly Market Review - July

We are pleased to release this month's market review, a summary of the factors driving global markets over the last month.
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3Q Principles for successful long-term investing

By Tai Hui
The Principles for successful long-term investing presentation uses select slides from the Guide to the Markets – Asia, to explain key investment principles that financial professionals can use with their clients.
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China A-shares inclusion: Still a no go

By Ian Hui

This paper, written by Ian Hui, addresses MSCI's announcement of delaying the inclusion of China A shares in their benchmark Emerging Markets Index and discusses the relevant implications.

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Brexit: What investors should consider

By Stephanie Flanders

Chief Market Strategist Stephanie Flanders discusses Britain's place in the EU and the pre-referendum landscape and despite of how a vote in favor of remaining in the European Union is probable, a “no” vote in the coming UK referendum is a distinct possibility and is something investors should be prepared for.

And what if Britain does votes to leave? Short-term economic and market impact and longer-term consequences are also discussed. But the transition to a new set of arrangements would be messy and potentially very costly, not just for the UK but also its closest trading partners.

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Addressing "Brexit"

By Tai Hui
The upcoming EU referendum on June 23rd continues to represent a significant driver of risk dynamics. That said, recent polls, show that the balance has shifted in favor of “remaining”.
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U.S. - 1Q16 earnings update: Beatings estimates, but not yet growing

By David Lebovitz
This bulletin recaps the first quarter 2016 U.S. earnings season.
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China: Improving growth signs, but pressure remains

By Marcella Chow
  • The largely in-line 1Q16 GDP reading, coupled with stronger-than-expected March activity and credit data offer some degree of comfort for China’s outlook, suggesting that the near-term tail risks remain low at this point.
  • That said, recovery is likely to be mediocre and short-lived, especially as the structural slowdown and de-leveraging linger. Also, some of the improvement in March was due to base effects and Chinese New Year distortions. Hence, we believe the economic momentum has not fully firmed up yet.
  • Reduced fears of China hard landing and recent stabilization in the RMB currency have lessened investors’ uncertainties towards China. Active investment strategies focusing on the Chinese government’s supportive policies as well as China’s growth rebalancing story can offer potential upside to investors.
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2Q Principles for successful long-term investing

By Tai Hui
This presentation uses select slides from the Guide to the Markets – Asia, to explain key investment principles that financial professionals can use with their clients.
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European Q4 2015 earnings: Economies are from Venus, markets are from Mars

By Alex Dryden
  • With 85% of companies in the Euro Stoxx 600 having reported (as of 16 March 2016), weestimate that European fourth-quarter 2015 earnings per share (EPS) declined by 5.9%year on year (y/y).
  • As has been the case in recent quarters, the headline number is badly distorted by the sharp falls in the energy market. Excluding energy, Stoxx 600 EPS actually grew by 1.2% (y/y).
  • Another unwelcome feature is the disconnect between equity returns and the performanceof the domestic economy. Regional equities are 1% lower than where they were at the endof December 2014 even though the eurozone economy grew by 1.5% in 2015.
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China: A tug of war between soft fundamentals and policy support

By Marcella Chow

Latest data suggest growth in 1Q 2016 continues to slow down and approach the 6.5% bottom line set by the government. Having said that, investors need to read the latest data with a grain of salt, as some could be distorted by the timing of the Chinese New Year holidays. We await the cleaner March data to provide more clarity on the underlying growth trend.

Given the low base and better sentiment, China’s macro data in March could show some improvement from January to February, including the Purchasing Managers’ Index (PMI), exports and industrial production

The still-soft economic momentum and the recent reserve requirement ratio (RRR) cut suggest growth stabilization will likely remain the government’s priority in the near term.

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China NPC: Growth back in focus for 2016

Despite setting a lower GDP target, we believe growth is still the top priority for China this year, as both monetary and fiscal policies will be supportive of growth.

The government reiterated its plan to accelerate the urbanization process as labor market conditions remain favorable, which is a much needed step in reducing the level of housing stock. China will continue to push through its supply side, state-owned enterprise and financial reforms, albeit at a slow pace.

The next five years are crucial for China to avoid falling into the “middle-income trap,” suggesting why this year’s policy maintains an appropriate expansion of aggregate demand. However, ignoring the excessive pace of debt accumulation may likely bring negative consequences to the real economy in the long term.

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A case for Europe

By Vincent Juvyns, Alex Dryden

Market confidence has been badly hurt in the opening weeks of the year as investors worry about the possibility of a global recession. We believe these fears are probably overdone and investors should take a step back and look at the big picture, particularly in the eurozone.

The eurozone saw moderate economic growth in 2015 of around 1.5%, and we see several reasons why this momentum should be sustained this year, including further support from the European Central Bank (ECB), more supportive fiscal policy and cheaper energy.

Some European sectors and companies will be negatively affected by weakness in global trade and the slowdown in China and other emerging markets. On balance, however, we believe that the domestic drivers for eurozone growth can offset these negatives. In this note we briefly outline those positive forces and restate the case for active investors to retain their exposure to regional risk assets.

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Emerging market strategy: Higher risk, higher reward?

By George Iwanicki
What summarizes the EM struggle right now is this: increasingly cheap valuations, and the potential for higher reward, juxtaposed against what we might call the summary statistic of all the headwinds weighing on emerging markets: a de minimis growth premium relative to what we’ve seen historically vs. the developed world and unfolding risks from Fed policy and China FX intentions hence higher risk, higher (potential) reward.
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China: Still sneezing hard

By Marcella Chow

This paper, written by Marcella Chow, discusses how the soft December data, including slower 4Q15 GDP growth, may add to concerns about China’s economic health.

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China: Financial short-circuit to start the year

  • While investors witnessed major market turmoil in China last year, the first week of 2016 has brought no relief, with the China A-share markets falling by more than 7% in two out of the first four trading days of the year.
  • The equity collapse was much more correlated with short-term psychological factors – including the potential removal of the shareholder ban, IPO registrations reform and the newly created circuit breaker system – rather than the actual economic conditions of China.
  • The equity market was further impacted by the Chinese renminbi hitting fresh lows, but we believe this is a needed transition as China moves away from benchmarking the renminbi against the U.S. dollar (USD) to a basket of currencies. We do not expect an extended depreciation as a steady and gradual depreciation trend against the USD is much needed to prevent excessive appreciation of the renminbi in trade-weighted terms.
  • China is expected to slow down further in 2016, as a two-speed economy led by the servicing sector is unable to offset the weaknesses in the manufacturing sector. We expect Chinese policymakers to intensify its monetary policy easing measures along with supply side reform to stabilize growth in the coming months.
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When will the Fed raise rates? Look at wages and job gains - Chart of the week

Despite a strong employment report, wage growth, which tends to have an inverse relationship with the unemployment rate, declined in December. This chart shows that investors should pay close attention to both job gains and wage growth for any developments that might change the Fed’s timeframe for raising rates.
 
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Chart of the week: Is it too late to buy into the European rebound?

This chart examines the evolution and composition of the global bond market and shows how there is still room for further gains in European equities as investors initiate or add to positions that they had largely eliminated in recent years. Today the majority of the global bond market is located elsewhere in other developed and emerging markets.
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