|September 20, 2019||
What is your outlook in Emerging Markets?
Our outlook for Emerging Markets has decreased slightly compared with the end of last quarter, but we are still on the positive side with strong macroeconomic and sentiment signals. Areas of concern include China’s August industrial production figures, fixed asset investment, exports, and retail trade, which all weakened. The recent spike in oil prices might also have adverse consequences on China's economy. Higher fuel prices might dent already-weakened consumers’ discretionary spending and add input costs in an already-weakened demand environment.
|September 20, 2019||
What appeals to you about Pacific region, specifically Australia, going forward?
Our model indicated a relatively strong score for the Pacific region with three of the sub-group of signals (valuation, macro and sentiment) all in positive territory (Technical indicators make up the 4th sub-group). Although Australia’s GDP growth hit a decade low in Q2, the almost 30-year uninterrupted growth track record isn't under material threat. The exports sector of Australia was of particularly important strength. Both the buoyant demand and high prices for hard commodities and the weak Australian dollar are important drivers of the export. Australia saw a current account surplus of $5.9 billion in the June quarter, the first surplus since mid-1975.
|December 30, 2018||
What do you make of the recent volatility in the market and how has it, or hasn’t it, impacted your outlook and investment decisions for the portfolios?
The recent volatility has not significantly impacted our outlook as our model has been indicating that the fundamentals of the U.S. economy are still relatively sound. As a result, the market volatility has served as an opportunity to tactically add some U.S. equity exposure at lower prices. We see this volatility as a reaction to uncertainty. However, the uncertainty has not materialized into impactful changes to fundamentals.
|December 29, 2018||
Are there any developments that have changed your outlook on Canada?
Our GTAA model indicated a higher score for Canada (EWC) partially due to an increase in sentiment signals. The Canadian Purchasing Managers’ Index recovered in October rising from 50.4 to 61.8, where 50 is the threshold between expansion and contraction. Purchasing mangers’ hiring intentions also rose moderately and inventories posted a significant jump.
The uncertainty surrounding trade relations with the U.S. caused some businesses to pull back on investment. However, we believe that the tentative agreement on a new North American free-trade pact will help to restore some confidence and possibly release some pent-up spending.
|September 30, 2018||
What developments regarding Canada (EWC) led to an increased exposure?
Sentiment in Canada improved in Q3 with the Canada Manufacturing PMI reaching 57.1 in June, the highest level in five years. Both July and August sentiment data remained robust despite the uncertainty of the trade pact between the U.S. and Canada. The consistently solid readings in PMI data point to modest growth in the Canadian manufacturing sector throughout the rest of 2018.
Economic signals have also been strong for Canada led by industrial capacity utilization, which improved significantly in the third quarter. This strength provides an encouraging picture for economic growth in the latter half of 2018, and the economic surprise index also increased steadily in recent months.
|October 4, 2017||
What led to the trimming of United Kingdom equities (EWU)?
Our model showed relatively weaker valuation, technical and sentiment indicators for EWU. UK’s economic leading indicator was not as optimistic as the Eurozone or other regions and countries. Economists forecasted U.K.’s GDP projection for the year to be 1.6%, down from 1.8% last year.
The industrial sector, which continued to expand but failed to recoup losses from earlier in the year, was another negative signal. This confirms our view that factory growth will fail to offset 2017’s consumer-led slowdown in the service sector despite the pound’s sharp depreciation. We are also cautious about the long-term outlook of UK’s economy and equity market.
The fallout from departing the EU may have ripple effects on the economy and too many questions still remain before a clear picture of the post-Brexit U.K. emerges.
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|September 20, 2017||
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