Perspectives Blog

Could tapering be good for stocks?

Fred Copper, Senior Portfolio Manager | December 16, 2013

Despite all the discussion surrounding quantitative easing (QE), there has been little theoretical justification for the link between QE and equity prices. Europe provides a glaring counter-example of the impact of central bank policy on financial markets. Once the psychic umbilical cord of QE is cut (tapered), the market may actually be cheered by the end of what has always been perceived as a temporary and extreme form of life support. Few i…

How will the Volcker rule impact capital markets?

Richard Manuel, CFA, Senior Analyst | January 6, 2014

, so it would stand to reason that eliminating prop trading should neither hurt nor help the banks. Certainly, the Volcker Rule has forced technology and compliance expenses to increase significantly, driving lower returns on equity (ROE). Economic theory would suggest that as the cost to compete rises, fewer competitors will remain in the industry, and that with this consolidation, the profits will rise for those that remain. While some players…

Not all emerging markets are created equal

Robert McConnaughey, Director of Global Research | January 27, 2014

security selection amidst growing dispersion in outcomes across the emerging world. It is not surprising that many investors may see EM as a highly correlated block. During the past decade, cross correlations between country equity indices doubled from the previous decade and individual security correlations moved similar orders of magnitude in equities and fixed income. The convergence of outcomes was largely the result of some common factors h…

Looking for diversification in emerging markets

Columbia Management, Investment Team | July 30, 2013

Emerging markets have become a significant component of the global economy, with higher GDP growth rates compared to developed markets. The wide range of local conditions and growth drivers present in emerging markets makes them particularly interesting as a diversifier for investors already exposed to developed markets. We believe that, for diversification, investors should consider small-mid cap emerging markets investments. By the Columbia…

Comments on the effect on global markets from the Ukraine crisis

Mark Burgess, Chief Investment Officer, Threadneedle Investments | March 12, 2014

To date, the fallout from the Ukrainian crisis has been largely confined to the emerging market debt, emerging market equity and commodity markets. At current levels, emerging market local currency debt appears to offer value, although we expect both the hard and local currency markets to remain volatile in the short term. Emerging equities reflect concerns not only around Russia and Ukraine but also the weaker growth outlook in Brazil and China…

Emerging Markets: Waiting on exports

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | March 31, 2014

Exports by emerging market economies are the most important factor in explaining long-term growth. EM exports have remained sluggish for the past three years due in part to the subpar nature of global growth. As emerging markets struggle to overcome the challenges to their growth story, the EM landscape will likely face significant challenges ahead. Equity markets in the developed world did very well in 2013 while the picture was far more mixe…

The importance of taking a long-term perspective

Jeffrey Knight, CFA, Head of Global Asset Allocation | February 3, 2014

…e believe equities, meanwhile, offer returns that are only slightly below their long-term average levels. This forecast derives from an expectation of ongoing economic growth (and consequently, earnings growth), and worldwide equity valuations that are not extremely expensive. Accordingly, we find that portfolios designed to rely more upon equity risk than fixed-income risk are more likely to succeed, on average, across the next five years. That…