Roasted and salted seaweed, traditionally eaten with rice in Asia, has become a popular snack food outside of the region. Being from Korea, I was astonished when I first encountered teriyaki-flavored seaweed and varieties that were mixed with almonds here in the U.S.—quite a difference from what I used to enjoy growing up, which was merely oil-roasted and slightly salted.
The sudden popularity of such dried, packaged seaweed snacks have led exports of seaweed, or gim as it is called in Korean, to surge. While many people know that the surname “Kim” is quite a ubiquitous Korean name (in fact one-fifth of the South Korean population are Kims), not many foreigners realize that it is pronounced “gim” just like the word for seaweed. The origin of the name is said to be from a Kim family that first started farming gim in the 17th century.
Nori, as seaweed is called in Japan (or zicài in China), has been cherished as a luxury food for hundreds of years. It is high in fiber and iodine, and has been used extensively in many cuisines since Japan invented a modern aquaculture method of cultivating the algae in the 1920s.
These days the Korean variety of edible seaweed is generally recognized as a superior quality product over seaweed produced in China, and tends to be more competitively priced than Japanese nori. Korea has produced more seaweed than Japan since 2011, and in fact also exports seaweed to Japan. The biggest overseas demand for Korean seaweed, however, comes from the U.S., which bought approximately US$64 million of the export in 2013, a whopping US$47 million more than it did in 2009. That is dwarfed by the country’s many tens of billions of dollars in exports of smartphones or automobiles, but seaweed still tops the list among U.S.-bound food exports, outpacing cigarettes, beverages and ramen.
With the consumption of seaweed gradually expanding to non-Asian consumers, seaweed products have received notable attention in new circles, and are frequently marketed as a healthy and tasty snack for the entire family. Major U.S. food retailers have even recently begun to launch private label seaweed products, and offer an increasingly wide range of variations.
Along with the U.S., Thailand, Canada, Russia, the United Kingdom, Brazil, and the United Arab Emirates are all seeing a big increase in such snack seaweed imports. It is interesting to see a food previously served only among particular populations or regions gaining global exposure. The ways in which the global food culture is evolving appears to be as dynamic as the evolution of global economies and industries.
Article by Soo Chang Lee, Research Analyst, Matthews Asia.
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
Photo: Alberto Carrasco Casado. Equities in 2015: Europe and Japan
The outlook for the world economy at the start of 2014 was arguably more attractive than it is now. We had expected markets to rise this year but we believed that the more cyclical sectors would lead. Instead, it has been a year when markets have been driven higher by moves in a narrow sub-segment of the market. Indeed, we have been extremely surprised by the aggressive declines in developed market bond yields this year (to 200-year lows in much of Northern Europe), as investors lowered their expectations for inflation, started to fear deflation (in Europe) and, as a result of increasingly scarce global growth, opted to aggressively pursue companies with stable and visible profitability above all else.
In short, it has been a year when earnings revisions have not been indicative of stock price performance, as shown in the charts below. For example, the right-hand chart identifies that year-to-date changes in 12-month earnings expectations for cyclical and defensive stocks are broadly in-line. The left-hand chart, however, clearly shows that the prices of these two styles of stocks have not moved in line with their similar earnings expectations, with cyclicals being significantly de-rated. Essentially, expensive stocks, sectors and geographies, have in many cases become more expensive.
Looking forward, however, while expectations for growth at the start of the year were high – across much of Europe at least after a strong rally in the second half of 2013 – they are now suitably lowered. This creates what we think could be a potential mismatch between valuations and growth expectations. As such, our portfolios are overweight Europe and also Japan while underweight North America and Asia, reflective of these valuation differences and divergent growth expectations. We retain a bias for more cyclical sectors over the expensive more defensive sectors.
Opinion column by Matthew Beesley, Head of Global Equities at Henderson Global Investors.
Photo: Joe Shlabotnik. Don’t Let Your Emotions Drive Your Decisions
The cardinal rule of investing is to “buy low and sell high.” However, investors historically have increased their allocations to stocks near the top of the market’s runs and decreased their allocations to stocks near the bottom of down markets. “As you may guess, movements in and out of the market are counterproductive for investors pursuing long-term goals because they end up buying when prices are high and selling when prices are low”, said MFS.
No matter what the market is doing or what the headlines read, don’t let your emotions drive your decisions. Counter with a sound investment plan and a good financial coach. Whenever you have questions, concerns, or ideas, talk and work with your advisor, explain managers at the firm.
MFS recommends: “He or she may best be able to help you pursue your long term goals. Keep in mind that all investments, including mutual funds, carry a certain amount of risk including the possible loss of the principal amount invested”.
Photo: Greraint Rowlan. Mexico, the Worm Has Turned
When the “Tequila Crisis” dealt Mexico the mother of all hangovers twenty years ago it is fair to say that the country was ill-prepared, says Edwin Gutierrez, Head of Emerging Market Sovereign Debt at Aberdeen Asset Management.
“But a country has rarely shaken off a hangover so well and so quickly. Mexico is partway through a cyclical slow-down at the moment, but gross domestic product (GDP) per capita has nearly tripled since the trough of 1995, inflation is manageable and debt-to-GDP is less than 37% (Japan’s is more than 225%). It is amazing what twenty years, a volley of painful lessons and sensible policymakers can do for a hangover”, explains Gutierrez.
One of Mexico’s biggest lessons from the Tequila Crisis was to issue debt in its own currency. A key moment in the crisis was the decision by Mexico to issue short-term debt in dollars. That debt came due very quickly and cost the country dearly as the value of the peso plummeted. It now issues largely in its own currency, which avoids that currency risk. The term of Mexico’s debt is much longer now too, giving it more time to repay it.
When the crisis hit, Mexico had woefully inadequate amounts of foreign exchange reserves which were promptly swallowed up as the peso’s tailspin kicked in, points out Gutierrez. When the coffers ran dry, the U.S. was forced to step in with a bail out. But the country has built up these reserves since, growing from a low of just under US$6 billion in 1994 to around US$180 billion (they have nearly doubled since the financial crisis alone). These reserves are a country’s way of saving for a rainy day, providing insulation when economies turn.
In 1991, the Bank of Mexico effectively fixed the exchange rate by allowing the peso to move within a short range against the dollar. By the end of 1994, a series of events pushed the dollar peg to a breaking point. The U.S. Federal Reserve (Fed) raised rates in February of that year, then a number of domestic events steadily led investors to lose faith in Mexico’s ability to finance its current account deficit, triggering a full-on rout of the peso ensued. Mexico has maintained a floating rate mechanism ever since, which has acted as a shock absorber as confidence has periodically ebbed and flowed.
“The lessons of the Tequila Crisis have been shared throughout emerging markets. Most fixed exchange rates have been replaced by floating systems. Local currency debt is the fastest growing part of the emerging market debt asset class”, says Gutierrez.
The average duration of the local currency debt index is around seven years (Mexico was issuing debt with a term of 28 days in the build-up to the crisis). In other words, issuers are trying to avoid the exact peril which befell Mexico.
Recent reforms under President Peña Nieto may help prevent future crises from emerging. In his first 20 months in office, Peña Nieto passed eleven structural reforms. Reforms to the energy sector, financial services, education, telecommunications, labor and competition policy aim to increase productivity and growth. Mexico’s reforming zeal makes it a bright spot among emerging markets, which in general tend to wait until crises happen before reforming. Spooked investors tend to pull money which forces policymakers onto the back foot and into knee jerk reactions.
According to Aberdeen, Mexico’s reforms should have a meaningful impact on consumer price inflation and get the country some way towards its ambitious 3% inflation target. In Aberdeen’s view, they do not, however, resolve the toxic combination of corruption and the inability of government to enforce the rule of law. There is no better example than the recent, dire abduction and execution of 43 students on the orders of a mayor in Guerrero state. “We do not believe time is on Peña Nieto’s side to fight this particular war, but the sheer zeal and foresight of his reform agenda so far bodes well. It is worth acknowledging, too, how enlightened they are. His energy reforms, for example, should not be fully realized for at least a decade, long after he has left office. We believe introducing competition into Mexico’s oligopolies will actually harm the country’s stock exchange in the short term as these companies see competition squeeze margins”, says Gutierrez.
“Much needs to be done to make sure the reforms lead to the change everyone wants, but it takes enlightened political leadership to have gotten this far. Mexican politicians have also shown a laudible ability to work together that those north of the border would do well to emulate. Mexico’s problems are far from solved but, in our view, the outlook is good. We also believe the reforms will bear fruit. Wage costs are relatively competitive so jobs should be created as China’s wages continue rising and manufacturers stand to benefit from the U.S. recovery. The trick for Mexico is to abstain from the bottle and focus on the task at hand,” concludes the report.
. Who Are the Most Influential Private Banking Executives in Latin America?
Who are the most influential Private Banking Executives in Latin America? This e-book, by Terrapinn, attempts to answer that question. “We have conducted vast amounts of research to compile this list of the Top 30 Private Banking Executives who do business in Latin America (in alphabetical order by last name)”.
These men and women are at the frontline of their industry and are some of the most innovative and disruptive executives in banking. This e-book provides a short career summary of each executive, as well as previous positions they may have held over the course of their career. While this list focuses only on 30 executives, there is no question that there are hundreds of more executives that are imperative and crucial to the success of Private Banks in Latin America.
The top 30 are the following, in alphabetical order:
Joe Albino Winkelmann, head director at Bradesco Private Bank (Brazil)
Paul Arango, managing director Private Banking at Credit Suisse (Miami)
Nicolas Rodolfo Bergengruen, managing director/head of Latam for UBS WM
Humberto García de Alba Carillo, chief investment strategist BBVA Bancomer PB (Mexico)
Vittorio Castellani, head Asset Management Solutions for LatAm at Societe Generale (Geneva)
Renato Cohn, co-head Wealth Management and managing partner at BTG Pactual (Sao Paulo)
Marcelo Coscarelli, Business head and managing director at Citi WM Latin Americas
George Crosby, managing director/president, HSBC Bank International (Miami)
Ernesto de la Fe, managing director, Morgan Stanley Private Wealth (Miami)
Marcos Frontaura, managing director Santander Private Banking (Chile)
Andres Gonzalez, head Private Banking Bancolombia
Fernando Perez-Hickman, co-general director at Banco Sabadell (Miami)
Juan Iglesias, CEO at Andbank (Nassau, Bahamas)
Javier Diez Jenkin, head of Affluent and Private Banking at BBVA Bancomer (Mexico)
Alvaro Martinez-Fonts, CEO JP Morgan Private Bank, Florida
Eduardo Nogueira, managing director/CEO Panama, Julius Baer
Juan Carlos Ojeda, responsible Wealth Planning at Banchile (Santiago)
Emerson Pieri, regional manager for South America, Barings Financial (Miami)
Adriana Pineiro, ejecutive director LatAm at Morgan Stanley
Diego Pivos, head Wealth Planning for Latin America, HSBC Private Bank (Miami)
Beatriz Sánchez, head Private Wealth Management Latin America at Goldman Sachs
Flavio Souza, global director, Itaú Private Bank
Salvador Sandoval Tajonar, Private Banking director at BBVA Bancomer
Dan Taylor, VP regional director at Royal Bank of Canada
Manuel Torroella, head Banca Privada at HSBC Mexico
Alexander G. Van Tienhoven, CEO Citi Global WM Latin America (Mexico)
Gabriela Vazquez, head Advisory office at UBS WM, Uruguay
Marc Wenhammer, Global Investments strategist at BBVA Private Bank
Photo: Skyseeker. Asia, Looking to 2015 and Beyond
Over the next decade, I expect Asia’s economies to continue to raise living standards and to narrow the income gap between its own citizens and those in the U.S. or Europe.
Why do I think this?
Asia continues to have a high savings rate. A country cannot invest or grow over the long term without a pool of savings, and it can be r isky to rely on external funding to finance domestic growth. Asia currently has enough savings to support its own development. It also has a track record of increasing productivity through improving education. The region has championed the individuals’ desire to make money. It has successfully opened its markets to the world in order to learn about new products and methods of industrial organization. Finally, it has a decent track record of government policy reform to support growth and markets. None of this has been perfect; and indeed, although rates of change hace been fast, Asia is still a relatively poor part of the world. Over the long term, all of this just means that there is plenty of blue sky ahead.
But what about the next year?
Much will rest in the hands of central bankers and still more will depend on Asia’s reform progress. For those who think it is too easy to focus on the future and too dangerous to dismiss the near term, I will be watching the following during 2015 to see how Asia’s growth is progressing.
First, Japan is home to the world’s best central banker, Haruhiko Kuroda. How often has that sentence been written in the history of central banks? Mr. Kuroda has paid attention to the monetary policy scholars regarding zero percent interest rates. He knows he has to be aggressive— and indeed credibly aggressive—in monetary policy. He seems willing to confront the conventional wisdom that bankers must be conservative, die-hard inflation fighters. Prime Minister Shinzo Abe appears to support him on this issue. I expect Mr. Kuroda will continue to push inflation expectations up to 2% and to keep them there. Remember, a weaker yen is the symptom of the policy, not the policy itself.
This inflation policy also creates incentives for firms to whittle down cash balances and raise prices. Not all companies will do it but we will look for those that have the willingness and the ability to take heed.
Yes, in a weak yen environment, even domestically focused companies can be attractive holdings because a reflationary environment can offset the currency weakness, particularly among companies that use higher operating leverage.
How does this compare to the rest of the world?
With all the talk of tapering, in effect, monetary policy has been tightening in the U.S. since May 2013. The Standard & Poor’s 500 (S&P 500) seems unconcerned, as it continues to rise on somewhat expensive valuations, considering the fact that corporate margins are already high.
Most people expect the U.S. economy to strengthen—and there is probably better than a 50–50 percent chance that it will. But there must have been some impact from the tighter policy and I do not think investors are paying much attention to the risks of a slowdown. The recent fall in the price of oil is surely a warning that all is not well with global growth.
Opinion article by Robert J. Horrocks, Chief Investment Officer, Matthews Asia
The views and information discussed represent opinion and an assessment of market conditions at a specific point in time that are subject to change. It should not be relied upon as a recommendation to buy and sell particular securities or markets in general. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Matthews International Capital Management, LLC does not accept any liability for losses either direct or consequential caused by the use of this information. Investing in international and emerging markets may involve additional risks, such as social and political instability, market illiquidity, exchange-rate fluctuations, a high level of volatility and limited regulation. In addition, single-country funds may be subject to a higher degree of market risk than diversified funds because of concentration in a specific geographic location. Investing in small- and mid-size companies is more risky than investing in large companies, as they may be more volatile and less liquid than large companies. This document has not been reviewed or approved by any regulatory body.
Photo: Michael Daddino. Fed Refreshes Punch Bowl Just in Time for Holidays
Last week U.S. oil plunged sharply then rebounded to end the week down just 1%. The Russian ruble had an even wilder run for the week ‑ down 25% at one point before recovering. Did oil find a bottom? U.S. equities turned in a powerful three-day rally starting Wednesday that reversed prior day losses to finish 3.4% for the week. More solid U.S. economic data: industrial capacity utilization hit over 80, a level that lore says brings capital expenditure. Thisisa review ofwhat happenedlast week inthe marketsbyPioneer Investments.
The FOMC reassured those who feared the Fed might take the punch bowl away, said Sam Wardwell, CFA, Senior Vice President and Investment Strategist at Pioneer Investments. Those are the reasons that back this point of view:
The combination of language change (as projected, ‘considerable time’ gave way to ‘patient’) and press conference statements more clearly pointed to a June lift-off. The changes in the dot plot” were slightly dovish—suggested a slower path of tightening. Also, “we see more solid U.S. Economic Data”, explains Wardwell.
Industrial production rose 1.3% month over month (m/m), above expectations…and unsustainable…but still very strong.
Capacity utilization rose to 80.1%. Lore holds that sustained 80+ readings bring capex.
Initial unemployment claims slid to 289k…fine; the 4-week average is below 300k.
The Q3 current account deficit ticked up (incoming Christmas presents).
According to the Bureau of Labor Statistics, real (after-inflation) average hourly earnings are up +0.8% year over year (y/y).
In the housing market, Pionner thinks that there is not a bounce, but builders remain upbeat.
Homebuilding has been trending sideways at roughly 1 million units per year. Starts slipped to 1.028 million units per year (mm/yr), permits slid to 1.035 mm/yr.
Mortgage applications dipped; applications remain down y/y, the generic rate was at 4.06%.
The NAHB builder confidence index slid from 58 to 57 after hitting a 9-year high of 59 in September. Note: builders are natural optimists—characteristic of many industries prone to booms and busts.
To conclude, Sam Wardwell sees that falling energy prices are depressing headline inflation, but not the economy:
Core CPI rose 0.1% month (m/m); (y/y) is 1.7% and trending sideways.
The average price of regular gasoline declined to $2.554/gallon, down 21% y/y.
Headline CPI declined 0.3% m/m as gasoline fell 6.6%. The y/y rate slid from 1.7% to 1.3%.
Photo: Moyan Brenn. Azimut Acquires 100% of AZ Global Portföy to Continue Its Growth Plans in Turkey
Azimut, Italy’s leading independent asset manager, has signed a binding sale and purchase agreement to acquire the remaining 40% stake in AZ Global Portföy Yönetimi A.Ş., becoming its exclusive shareholder. In addition, Azimut has agreed to sell its 10% equity stake in Global Menkul Değerler A.Ş. to the majority shareholder of GMD at market price.
On November 7th 2014, AZ Global was the first independent asset management company to be approved by Capital Markets Board to operate under the new regulatory framework enforced starting on July 2014. The new license sets a strong infrastructure for the Turkish asset management industry to deploy growth opportunities both in terms of production and distribution, enabling asset managers to directly establish and market, through proprietary sales force, their own products and services.
The transactions will enable Azimut to develop its plans in Turkey by investing in an integrated financial advisory platform comprised of its first local funds factory and distribution, AZ Global (to be renamed Azimut Portfoy Yonetimi A.S.), and AZ Notus, its discretionary portfolio management partnership.
Subject to the regulatory approval by the competent authorities, Azimut, through AZ International Holdings S.A., will recognise a total consideration (including the sale of GMD shares assuming current market prices) of around € 1.3mn.
Pietro Giuliani, Chairman and CEO of Azimut Holding, comments: “We continue believing in the potential of Turkey and the prospects of the local asset management industry, supported by a team of talented professionals and strong regulatory standards. Since our first JV in 2011, Azimut has developed an integrated platform which has achieved a 21% market share among independent players also thanks to the launch of two UCITS funds managed and advised by our Turkish colleagues. We are grateful to Global for the results we have achieved together and we will continue cooperating in the future.”
Capital Strategies Partners, a third party mutual fund distribution firm, holds the distribution of AZ Fund Management products in Latin America
Photo: Richard Masoner. Oil: Boon or Slippery Slope?
Are lower oil prices good or bad? Robert Spector, CFA, Institutional Portfolio Manager, Sanjay Natarajan, Institutional Equity Portfolio Manager, and Robert M. Hall, Institutional Fixed Income Portfolio Manager, from MFS, answer this question through a recent investment view.
In a year full of macro surprises, the sharp decline in the price of crude oil is the latest development to make headlines. Roughly one year ago, the consensus forecast for the end of 2014 was $100 per barrel for West Texas Intermediate and $110 for Brent crude — a miss of about 30% compared with current prices around $70. “As if on cue, many have been ready to describe how absolutely wonderful the oil price plunge can be for the global growth outlook”, highlights the report.
Winners and losers
To be sure, there are bound to be pockets of the global economy that will benefit from lower energy costs. When all the positives and negatives are balanced out, we can likely expect a net boost to global growth relative to what we would have seen with $100 oil. Then again, it was weak global growth —alongside oversupply— that was a key contributor to falling crude prices in the first place, so the argument becomes kind of circular, highlight MFS’ portfolio managers.
“We prefer to think of the oil price drop as stimulative overall, similar to a tax cut. Declines in the price of this or any other commodity help distribute growth away from regions that are producers toward those that are consumers. On balance, the net benefits to China, Europe, Japan and the United States could outweigh the hits to activity in Canada, Norway, Russia and above all the Organization of the Petroleum Exporting Countries (OPEC), where the erosion in terms of trade would impair domestic incomes, currencies, government revenues and capital spending plans”.
The drop in oil prices will put more downward pressure on already low global inflation, pushing some countries — namely, the United States and the United Kingdom — further away from their inflation targets and others — including the eurozone members — closer to mild deflation.
“Again, this acts in the same way as a tax cut to boost real consumer incomes. But when growth is weak and debt levels are high, any negative shock to nominal growth and persistently low inflation expectations could be bad for fiscal trends and rekindle concerns about debt sustain- ability — a potential risk for Europe”.
Implications for central banks
The impact of falling oil prices on inflation provides central bankers with yet more justification to keep the liquidity taps wide open. For the US Federal Reserve, which is expected to raise rates at some point next year, muted inflation pressures via lower oil prices tend to offset the effects of tightening labor markets. Should the Fed choose to postpone the anticipated rate hikes, this may be its excuse, states MFS.
The European Central Bank (ECB) will probably move toward outright sovereign bond purchases next year in its effort to fight deflation, while the Bank of Japan may maintain its easy money stance as inflation drifts away from its target. The combination of low inflation and slowing growth has already spurred the People’s Bank of China (PBOC) to take action with its first rate cut since 2012, with more likely to come if growth and inflation remain weak.
“In short, we would avoid becoming overly optimistic about the impact of falling oil prices on the global macro environment, as certain producing economies are likely to be hit pretty hard and the latest down-leg after OPEC’s decision not to cut output quotas could tip Europe into a mild deflation. Nevertheless, when the positives and negatives are netted out, and given other sources of stimulus already in place, there may be enough global growth in 2015 to support the valuations in risk assets“, concludes the report.
Photo: Andrew Gillan, Head of Asia (ex Japan) Equities at Henderson. Henderson Points to Lower Commodity Prices as a Big Positive for Asian Corporate Earnings in 2015
Andrew Gillan, Head of Asia (ex Japan) Equities at Henderson highlights in this interview risks and opportunities for 2015 in Asian markets.
What lessons have you learned from 2014?
It has been a year of divergence between individual markets within the region. This is partly politically-driven, with the change in leadership in India and Indonesia buoying those markets. But we have also seen other ASEAN (Association of Southeast Asian Nations) economies like the Philippines and Thailand perform well. Despite dollar strength, the traditional export economies of North Asia have not really benefited in terms of stock market performance despite relatively cheap valuations in China and Korea particularly. Volatility has increased through the year but Asian markets have held up relatively well following QE tapering, and the fall in commodity prices and oil should broadly benefit the region looking into next year.
Where do you see the most attractive opportunities within your asset class in 2015?
India remains one of the most positive markets but valuations also reflect that. We remain overweight as we still feel that the investments we have in financials, consumer, pharmaceutical and IT services can continue to generate significant profit growth and superior returns over the next few years.
What are the biggest risks?
Clearly the risk is that the economic reforms stall but the types of companies that we have exposure to have delivered impressive returns even in a weaker political environment. Our favoured holdings include both HDFC and affiliate HDFC Bank, Tata Motors, personal care, health care and food products group, Dabur, IT and outsourcing services group, Tech Mahindra, and pharmaceutical group, Lupin.
What is the highest position of the portfolio?
In absolute terms, China remains our highest country position at more than 20% of the portfolio and we have a mix of both new and old economy companies in addition to good consumer exposure. Despite the negative headlines and the reality of adjusting to a lower headline rate of growth – although importantly, better quality growth – valuations look attractive and company fundamentals are positive. There will be repercussions from the excessive loan growth of the last decade but I would also expect policy support to keep the economy on the right track. Favoured holdings include Baidu, which dominates the internet search market. This market continues to expand at an impressive rate, particularly from mobile communications, and the company is striking a good balance between investing for the future and profitability, as it monetises its market leadership position. In the consumer sector, we have exposure to auto companies, Brilliance (BMW’s joint venture partner) and Dongfeng Motor (partnerships include Nissan & Honda), which continue to offer good growth prospects and look attractively priced.
Are you more positive or negative now than you were 12 months ago on the economic and investment outlook? Why?
The regional index is broadly up in line with earnings growth for the year so that offers some comfort although we have seen stronger moves and consequently higher valuations in certain markets. In the short term, lower commodity prices should be positive for corporate earnings in Asia. Longer term, progress on reforms in the larger markets could provide a boost to equity markets and support the already positive macroeconomic investment case for Asia. Demographics, relative fiscal strength and a higher rate of growth ensure Asia looks favourable relative to other regions.
