Perspectives Blog

Asia’s emerging markets – Room to run

Dara White, Senior Portfolio Manager | November 10, 2014

…itative easing and eventual rate hikes. Asia is in much better shape today than in the late 1990’s when external debt to gross domestic product (GDP) was above 30%. Today it is 16%. In Southeast Asia, it was 100; now it is close to 30%. Also, the type of debt is very different. Local debt markets are much more developed, so companies have different alternatives to finance capex, etc. without having to take the exchange rate risk which doomed many…

QE worked, but not as advertised

Zach Pandl, Portfolio Manager and Strategist | November 3, 2014

…ers have pointed out, QE on government bonds can be thought of as changing the maturity structure of outstanding debt: the Fed buys bonds and “issues” short-term government liabilities in their place. Thus, at least in this one dimension, QE was economically equivalent to Treasury buybacks funded with bill issuance. History shows that these types of debt maturity changes tend to have small effects on bond yields—and in the U.S. they were in any c…

M&A in healthcare – Out with the old, in with the new?

Harlan Sonderling, CFA, Senior Healthcare Analyst | March 31, 2014

Recently the market has been quite optimistic about merger synergy promises. History suggests investors should be diligent about analyzing acquirers’ claims around merger benefits and returns. While attractive acquisitions may lie ahead, it is critical to continue to carefully evaluate acquirers’ strategies and claims. The “old” healthcare M&A In the “old days,” pharmaceutical Company A would announce its acquisition of Company B for stock…

In the land of 7 footers, 6’8″ plays guard

Fred Copper, Senior Portfolio Manager | May 5, 2014

The expected real return on most “safe haven” assets is currently negative. Risk seeking behavior could result in a bubble encompassing all risky assets. While current indicators support a pro risk stance, we are prepared to change our positioning as market conditions dictate. There is a great deal of discussion currently about the likely emergence of asset bubbles in capital markets driven by hyper-stimulative central bank policy. However, we…

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…

Q2 fixed income outlook – Hitting for the cycle

Gene Tannuzzo, CFA, Senior Portfolio Manager | March 31, 2014

We have started to reduce exposure to high-quality bonds with limited upside potential and high-yield bonds in which credit risk appears too aggressive. Following weakness last year, emerging market debt has posted gains this year, and we expect further strength ahead as volatility subsides. While we expect a flatter yield curve over the next few months as investors focus on the timing and pace of rate increases, we don’t think they should avoi…

The beginnings of a new moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 2, 2014

…stily implemented fiscal measures in a bid to prevent a sharp slowdown. Low return projects and local government debt issues followed, including the LGFV(2) issues that have been touted as a potential non-performing loan problem for the banks. Policymakers did manage to keep growth above 9% until 2011 (Exhibit 1), but sustainability was quickly called into question. Fortunately, the need to rein in debt was recognized relatively early and signifi…