Market weekly: Convertible bonds are hybrid instruments combining bond and equity characteristics. As a result, they offer some equity upside, but with bond-like protection on the downside. If we are at the start of a cycle of rising interest rates,
An investment rationale for institutional investors: In this paper we introduce the notion of themes as an additional investment dimension beyond asset classes, regions, sectors and styles, and we propose a framework for allocations at a strategic asset allocation level.
Equity Outlook – October 2021: Equity markets are finding the transition to the post-pandemic landscape more challenging than one might have expected. While the Covid-19 pandemic is certainly not over, infection rates have been falling in most countries and high
Market weekly: Investors with China exposure, or an appetite for it, face a raft of issues ranging from slower growth, which may or may not be condoned by Beijing, to toughened and expanded clampdowns on sectors. Add in persistent Sino-US
Diverging macroeconomic policies in China and the US have created market volatility recently amid concerns that China’s growth slowdown could spill over into Asia and a less generous US central bank could mean tighter US dollar liquidity for …
In recent quarters, US companies handily beat consensus earnings estimates as the economy reopened and earnings were compared to the weakness in the 2020 lockdown periods. This neat showing was always going to be a tough act to follow, particularly
Video: Water is a limited resource – yet demand keeps growing. At the same time, climate change greatly affects the availability and quality of clean water through droughts and floods. Given that water …
China bans Bitcoin, embraces dlt with ESG implications We don't have to sacrifice a strong economy for a healthy environment. Dennis Weaver SUMMARY China’s renewed crackdown on bitcoin aims at tackling the country’s problems of power shortages, climate control, creeping
As the dangers of environmental, social and governance (ESG) risks have been broadly explored and acknowledged, many countries have imposed mandatory rules on companies to report more information on these issues in their financial disclosures or standalone sustainability reports. One
Financial market observers have drawn parallels between the recent credit events in China[1] and past crises such as the 2008 US subprime crisis triggered by the collapse of US investment bank Lehman Brothers and the 1998 collapse of hedge fund
Domestic energy supply shortages in Europe and dependence on volatile global markets are contributing to record gas prices across the continent. In the US, the latest inflation data is further testing the US Federal Reserve’s hypothesis that …
What is polysilicon, what is its role in solar panels and are there any social and governance concerns around its production? Here is a primer. Polysilicon, a high-purity form of silicon, is a …
What should investors make of the flurry of regulatory tightening that China has implemented since the second half of 2020? How do the measures fit into China’s central strategy as it seeks to strengthen its domestic sector and embarks on
After seven consecutive months of gains, global equities fell by 4.3% in September (the MSCI AC World index in US dollar terms), cropping their year-to-date growth to 9.8%. While emerging market equities posted a similar loss (-4.2% for the MSCI
The natural world is in crisis: We are losing biodiversity – the very fabric of life – at an alarming rate. Investors would do a poor job if they did not seek to preserve the fabric that is at the
The insurance industry needs to think about sustainability through both an underwriting and an investment lens, says ESG analyst Xuan Sheng Ou Yong. Sustainability issues such as climate change have been gaining more attention among insurance companies since they face
Market weekly: The S&P 500 Index ended a seven-month winning streak in September. In seeking an explanation, the first thing that comes to mind – and probably the most common or obvious answer that you hear for … Listen to
After a good start, September saw equity markets take a hit, particularly in emerging Asia. Alongside ongoing investor concerns about the pandemic and weakening global growth momentum, markets were rocked by news of debt payment problems at Chinese property developer
Weekly investment update: The recent spikes in energy prices and US Treasury bond yields have strained emerging Asia’s asset prices and currencies. Rising commodity prices are worsening Asia’s balance of payments dynamics, putting the currencies of large oil-importing countries under
China is cracking down on bitcoin in a bid to overcome problems such as power shortages, climate control, financial disruption and the creeping erosion of its monetary policy sovereignty. At the same time, Beijing is embracing distributed ledger technology (DLT)
Weekly investment update: Equity markets have remained choppy in the face of rising uncertainty: there are worries over Chinese and global growth, bond yields are rising and the monetary policies of the main central banks appear to be shifting. Yet
Be it the catastrophic flooding in Germany and Belgium, the wildfires in southern Europe, the US and Australia, the ‘heat dome’ in North America or the water cascading into New York subway tunnels, there has been no shortage of recent
The digital renminbi is unlikely challenge the US dollar’s global dominance any time soon because of the Chinese currency’s structural limitations. However, it may prompt changes in China’s technology and financial sectors that could indirectly enhance the international competitiveness of
Thematic investing brings a new dimension to the usual asset class categories, resulting in fresh opportunities for investors to diversify portfolio risk and mitigate the impact of correlations between asset classes, sectors, regions and styles. Investing in themes is different
Market weekly: There are clear opportunities across the sector even if valuations of tech shares have now more than doubled from the pandemic lows of last March as technology emerged as the answer to many of the challenges the virus
A new survey conducted by Greenwich Associates and sponsored by BNP Paribas Asset Management confirms the strength of the shift to thematic investing. Both institutional and wholesale investors expect a thematic focus in their investments to improve the long-term performance.
It’s only a matter of time before companies will have to report on their climate-related risks. They should get ahead by putting the processes in place to do so now, says Thibaud Clisson. For the financial sector to respond adequately
In 2017, we set out to understand how asset owners and asset managers planned to integrate ESG. Our results – outlined in our first ESG survey “Great Expectations” – were encouraging, showing commitment to ESG but little in the way
It’s payback time for investors who have been seeing a return to favour of the equity value investment style after years of underperformance versus growth stocks. A sustainable investing approach in value equities can enable investors to benefit from attractive
Market weekly: Uncertainty over the macroeconomic landscape and the outlook for monetary policy currently combine with an awareness among investors that by many measures, valuations in public markets are on the high side. Listen to the podcast or read the
Market weekly: Emerging market equities offer investors a wide range of diversification opportunities across economies with a solid post-pandemic growth profile that include, but also stretch beyond, China and the wider Asian region. Quang Nguyen, head of global emerging market equities,
The world’s largest organisation for the protection of nature – the International Union for the Conservation of Nature (IUCN) – holds its quadrennial gathering this week in Marseille. Rescheduled from 2020 due to the Covid-19 pandemic, the event is the
In 2020, the world produced 1 864 million tonnes of steel. This, combined with an energy-intensive production process, means the steel industry is responsible for a great deal of greenhouse gas emissions, more so than for example producing chemicals or
Market weekly: What will be the consequences of the Covid-19 pandemic for the food and agriculture sector? How is the transition towards more sustainable food production and consumption affected? What we have seen so far is an … Listen to
Weekly investment update: Investors and economists spent the summer waiting for Fed chair Jerome Powell’s Jackson Hole speech in late August and the first part of September commenting on it. The next meeting of US Federal Reserve policymakers is not
There is much talk in the investor community around the three letters “ESG” (environmental, social, governance), but when it comes to corporate sustainability, CSR (corporate social responsibility), is equally as important. While the former provides a …
Growth in the net-zero digital economy relies on increased production of critical ICT metals and rare earths. How can we green the world and connect it, while limiting the social and environmental impact? There is much talk about the scope
Weekly investment update: Risk assets performed well again in August. Chair Powell said nothing in his keynote speech at Jackson Hole last week to reverse the positive trend. Low real yields continue to underpin valuations in …
Since the Sino-US trade war in 2018, some large developed countries have been pushing to reshore their global production, in effect seeking to ‘decouple from China’. Chatter about such a trend has raised concerns that Asian supply chains, which underpin
Hydrogen can be seen as the answer to the challenge of reaching net-zero emissions as long as it can be produced without emitting CO2 – in other words, as long as it is green. Its characteristics have earned it the
Asset Allocation Monthly: During August, investor edginess increased. Financial markets partly reflected this with a decline in equities and commodities, a fall in long-term bond yields, and a rise in the US dollar. Expectations about the US Federal Reserve’s monetary
Allocations to Chinese equity and fixed income should stand alone rather than be part of global or emerging market strategies for investors looking for diversification and potential excess returns from the vast opportunity set that Chinese financial assets represent. A
Market weekly: Being inclusive can lead to better results. It can also raise a company’s standing among the general public, in the labour market, among suppliers and customers and with regulators and investors. In our view, organisations that are more
Climate change impacts human health in a number of ways. Rising average temperatures mean a higher risk of heatwaves – at the time of writing, the US Pacific Northwest is experiencing ‘life-threatening’ temperatures. Indeed, the Lancet has described climate change
Market weekly: Addressing ecosystem restoration is just as pressing as tackling CO2 emissions and can generate billions of dollars of investment opportunities, as Ulrik Fugmann and Edward Lees, co-heads of the Environmental Strategies Group, explain. Much of the focus in the debate on
Zhikai Chen: On Saturday 24 July, China imposed stricter regulations on China’s education sector, including re-classifying tutoring companies as having “non-profit” status. The State Council officially released the Double Reduction (2R) policy. As a result, China education stocks plunged, and
If any good at all is to come of the pandemic, it is already being seen in the rapid and innovative response of the healthcare and medical technology world to a profound and urgent need. Stretching far beyond the development
For the first time in several months, inflation in the US has moderated, indicating that price pressures in some areas have weakened. Big questions remain over the extent durable goods prices – which have been a significant source of inflation
Video: “We can see the evidence all around us,” Edward Lees and Ulrik Fugmann of the Environmental Strategies Group argue as they stress the ever more obvious need for the energy transition as populations, incomes and urbanisation grow, fuelling greater
China was first to recover economically from Covid-19. However, its stock exchanges do not reflect this: equities have been under pressure since the Chinese New Year. That should not be a surprise since China’s growth momentum has been fading. It
