A Fruitless Game
In this month's Asianomics Group Strategy Report, A Fruitless Game, we explore the prospects of a market crash. Anything is possible in these days of sharply decaying political leadership and commonsense (in the West and Middle East in particular) but the point that we would make is that the economics of the global economy, and the signals from the United States for sure, do NOT point to a market crash supported by income weakness or payments difficulties. These are usually the conditions which undermine the health of the banking sector causing, what Austrian economists tend to refer to as, secondary banking crises i.e., recessions.Economic growth and market performance do not coincide all that much but it is unusual for markets to collapse when economic growth is healthy, debt servicing ability is sound and the banking sector is without obvious weak points - subprime lending being the obvious factor in 2007. We look at a number of indicators which suggest to us that the US is not a threat to global financial markets. We could apply similar indicators in the EU and Asia and arrive at exactly the same conclusions.
Does that mean the increased volatility and market gyrations of the last two months are a buying opportunity? We would not go that far for the US because of our concerns about the squeeze on 'free money' which we outlined in the Mr Trump's Black Elephant report but we have not sold down our Asian equity holdings and have been gradually adding to some. Growth and earnings still look good to us.
Asianomics, founded by Dr Jim Walker in 2007 and based in Hong Kong, specialises in economic analysis research, cross-referencing their work with credit cycles, profit cycles and cash flows. Asianomics focus is on developments in the Asia-Pacific region, and they also cover developed markets like the US and Europe.
The Austrian Economics model provides a framework for the economic research. The basis of the School of Austrian Economics is that economies work more efficiently and effectively when companies and individuals are free from excessive interference by government and special interest groups. The Asianomics economic research team includes Deputy Chief Economist Sharmila Whelan who is recognised for non-consensus thinking and her depth and quality of primary research, and Chief Economist Dr. Jim Walker.
Asianomics’ subscribers have access to regular economic commentary, stand-alone Country Reports, Special Reports and Investment Strategy Reports. Dr. Jim Walker also provides weekly webcasts.
Dr. Jim Walker is regarded as one of Asia’s leading economists. Prior to setting up Asianomics, he was the Chief Economist at CLSA Asia-Pacific Markets, where he worked for more than 16 years. He has achieved numerous ‘Best Economist’ rankings in the Asiamoney, Institutional Investor and Greenwich surveys of fund managers.
Previous successful calls include:
- In 1995 Dr. Jim Walker wrote about the prospect of Asia being forced off its de facto dollar peg “within the next two-three years”. The Asian Crisis, precipitated by the Thai baht devaluation, began in July 1997.
- Forecasted the US 2007 downturn and financial sector meltdown in series of ‘Apocalypse’ reports.
- Called early the upswing in the Indian stock market in the final quarter of 2013.
Recent Recommendations:
- Overweight China - We are overweight Chinese equities with momentum improvement in the economy.
- Short Sterling, Long Renminbi - China’s currency offers good upside with a positive carry.
- Short European Financials, Long Indian Financials - This is the simplest pair trade to play superior demographics and growth in Asia relative to the region with the biggest problems.
- Long EM Asia, Short Developed countries - South and SE Asia, and direct investors from North Asia, are ‘buy and hold’ investment bets.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.