- Global Investment Views - October 2018
Global Investment Views - October 2018
Monday 10 September 2018
Research / Market
Price dislocations lead to a rise in contrarian views
The hot summer in emerging markets (EM) has been a key investor theme in the third quarter of this year. While the ongoing US/China trade tensions continue to weigh on investor sentiment, the sequence of country-specific stories (Turkey, Argentina and South Africa) contributed to the almost indiscriminate repricing of EM assets, starting with plummeting EM currencies. The causes of the collapse seen in the currencies’ values in these countries are different (need to apply for IMF aid for Argentina; balance of payment crisis in Turkey, accelerated by the perceived lack of independence of the central bank; the start of an economic recession in South Africa, with additional concerns regarding the land reform plan).
Bavarian elections: Eropean political landscape continues to evolve
"The poor performances from the traditional parties in the Bavarian elections represent early signs of a political reshuffle at the federal level."
Late cycle features at play: more pain, but not the end of the game
"We expect further volatility and possible additional down moves led by the growth part of the market and possible pressure on the high yield side as well. But it is not going to be a market capitulation."
Italian budget proposal under scrutiny
"The key points of the budget law. The Italian Government negatively surprised the markets by announcing a substantially increased budget deficit target for 2019-2021 to 2.4% in a move that could undermine the potential to reduce the Italian debt burden (130% of GDP) in the coming years"