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Equities

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China’s Stagnating Economy

China’s economy is cruising at a very low altitude. The odds are that China’s equity rebound is running out of time. The RMB will continue to depreciate versus the US dollar in the coming months, albeit the pace may be modest.

China Investment Strategy by Qingyun Xu
The Effect of Interest Rates on Euro Area Small Caps
Euro Area small caps typically outperform large caps whenever the trade weighted euro appreciates and underperform whenever it depreciates. The rationale is simple. Most European large cap companies are large multinationals that export their products outside…
Daily Insights
Net Interest Income Growth Is Set To Decline
According to BCA Research’s US Equity Strategy service, Q1 earnings results signaled that net interest income (NII) growth is set to decline in US banks. For nearly two years, America’s largest banks enjoyed a surge in NII thanks to rising rates and the…
Daily Insights
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Banks: From Bread And Butter To Pastries

Q1 earnings results of the largest US banks have demonstrated that the engine of recent growth in profitability, NII, has faltered as funding costs are rising fast. However, the resurgence in non-NII thanks to a revival in corporate activity has been a saving grace. Earnings growth appears to have bottomed, while valuations are attractive. To play up portfolio exposure to an upcoming surge in capital markets activity, and minimize exposure to declining profitability in traditional banking services, overweight Diversified Banks and Capital Markets, and underweight Regional Banks.

US Equity Strategy by Irene Tunkel, Guy Russell
Asian Trade Suggests Strong Global Growth Momentum
Export dynamics of small open economies are a bellwether for global growth. The latest Taiwanese and Korean export numbers are consistent with a revival in global trade. Taiwanese export orders grew by 1.2% y/y in March following a 10.4% y/y contraction in…
Daily Insights
Is The Market Now Pricing No Landing?
By the end of 2023, the “soft landing” scenario became the dominant narrative in financial markets. Following the regional banking scare in March of last year, market participants slowly came around to the view that the economy was entering a goldilocks…
Daily Insights
Will Semiconductor Stocks Continue To Decline?
Over the last weeks, US semiconductor stocks have plunged by over 17%. In a way, this correction should be expected. Semiconductor stocks had skyrocketed this year. Even after the recent pullback, semi stocks are still up over 20%…
Daily Insights
Downside Risk To Margins
According to BCA Research's European Investment Strategy service, European profit margins have downside because they are both elevated and procyclical. European net margins stand at 7.7% above their long-term average of 5%. Analyst expectations…
Daily Insights
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The Margin Risk

European profits margins are elevated. Will a mild recession be enough to bring them down?

European Investment Strategy by Mathieu Savary
Fed Beige Book Suggests Lackluster Consumption
BCA’s US Beige Book Monitor – an indicator we use to gauge changes in the language of the Fed’s Beige Book report and which historically tracks US GDP growth – has improved in April. Nevertheless — and despite March's hot retail sales and February's…
Daily Insights

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