China’s property sector, monetary policy, and exchange rate

With China’s property sector – and economy more broadly – struggling, we think more PBOC rate cuts are on the way this year, which we expect to result in further falls in the country’s government bond yields and a weakening of its exchange rate.

18 January 2022

More thoughts on developments under the hood of the NASDAQ

Although the prices of a growing number of shares in the NASDAQ 100 have been floundering recently, we are still not convinced that this heralds an imminent collapse in the index.

17 January 2022

Riksbank to have to change tack

The Riksbank has learnt from its past tendency to project rate hikes that never arrive. But the single repo rate rise by end-2024 that it currently projects is stretching the limits of plausibility in the other direction.

17 January 2022
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We doubt that EM equities will continue to outperform

While emerging market (EM) equities have performed better than developed market (DM) equities so far this year, we don’t think that this pattern is likely to continue.

We think that China’s equities will continue to struggle

Even though we doubt that China’s equities will fare anywhere near as badly over the next couple of years as they did in 2021, we do not expect them to make strong gains from here either.

Key financial market calls for 2022

We do not think the returns from many financial assets will be as good in 2022 as they were in 2021. For a start, we envisage a sell-off in government bonds in most places, reflecting the outlook for monetary policy. And, in general, we foresee an underwhelming performance from equities, including in the US and China. We expect this backdrop to be accompanied by a further broad-based rise in the US dollar. In view of the wider interest, this Global Markets Update is also available to clients of our Asset Allocation & FX Markets services.

13 January 2022

EM equities may continue to underperform in 2022-23

We think that emerging market (EM) equities will continue to underperform their developed market (DM) peers over the next couple of years, even if that underperformance is far less stark than it was in 2021.

Rotation may lead to further US stock market underperformance

We expect sector rotation to lead to an underperformance of mid- and large-cap equities in the US relative to those in the rest of the developed world in 2022, in contrast to most of the period since the Global Financial Crisis.

11 January 2022
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