Emerging Markets
Mexican financial markets have been this year’s stellar outperformers, both in absolute terms and relative to their EM peers. Naturally, the question arises: how sustainable is this rally? According to our Emerging Markets Strategy team, Mexican markets…
The conventional wisdom is that China’s economy is overly indebted and too reliant on residential construction and exports as drivers of growth. While there is much truth to these claims, they ignore the underlying problem ailing China: excess savings. …
The above chart illustrates the BCA Market-Based China Growth Indicator, which is made up of 17 series grouped into four asset class subcomponents: currencies, commodities, equities, and rates/fixed-income. The purpose of the indicator is to act as a broad…
The fiscal impulse philosophies of the two largest economies of the world are set to pull in opposite directions in 2023. After the massive fiscal stimulus of 2020, the US had been cutting back on its deficit. But US fiscal policy is no longer restrictive.…
On Monday, Asia Pacific equity markets closed in the red due to the news that China’s largest real estate developer, Country Garden, is suspending the trading of some of its bonds. This recent episode is a continuation of Chinese economic woes, which our…
Chinese credit and money data fell significantly below expectations in July. The CNY 0.53 trillion increase in aggregate social financing marks a significant slowdown from CNY 4.22 trillion in June and came in significantly below expectations of CNY 1.10…
Numerous divergences have opened up between global risk assets and global business cycle variables. These gaps are unsustainable, and odds are that the recoupling will occur to the downside with risk assets selling off.
On Wednesday, President Joe Biden announced that a new ban on some US investment into China’s quantum computing, advanced chips and artificial intelligence sectors will come into force next year. This latest escalation is consistent with our Geopolitical…
China’s CPI and PPI inflation release for July indicates that deflationary pressures dominate the domestic economy. After remaining unchanged in June, consumer prices fell by 0.3% y/y. Meanwhile, the 4.4% y/y drop in producer prices fell below expectations of…
The Mexican peso is the best performing major currency so far this year, gaining 14% vis-à-vis the greenback over this period. Even during the latest bout of dollar strength since mid-July, MXN has weakened by the least among its peers. This follows an…