This will in turn lead to a secondary focus for the market on the macro front, namely the need to assess monetary policy actions across the regions. The U.S. Federal Reserve has been more vocal about the potential need for interest rate cuts, as has the European Central Bank, so a more accommodative monetary stance is likely to be a theme for the rest of the year and beyond.
On the economic growth front, leading indicators are weak across all regions, which highlights downside risk to GDP estimates and earnings forecasts. In our view, equity valuations are relatively more supportive in Asia and Europe than they are in the U.S., although the backdrop of weakening economic momentum means that monetary policy assessment has become an important aspect to consider when assessing both direction and style leadership in the market.
Impact of Tariffs
The EM Opportunity
Focus on Asia
Meanwhile, in Hong Kong, while the local economy is more sensitive than most to problems in the overall trade environment, we believe the stock market includes companies with really attractive long-term secular growth characteristics. Apart from the obvious impact of money flows that will be needed to avoid unwanted deviations from benchmarks, we see the inclusion of A shares in major indexes as likely to drive the Chinese equity market forward in terms of corporate governance and a greater focus on ESG factors. We also see further inclusion as likely to drive a further reform and liberalisation of capital markets.
Growth: Turning a Corner
The Momentum Continues
Cautious Optimism for Equities
Realistic About Risk
Looking Beyond the U.S.
Where Do We Go from Here?
U.S.-China: Fallout from Trade Tensions?
Royce & Associates
Resilient Growth, Despite Uncertainty
The MSCI World Index is an unmanaged index of common stocks of companies representative of the market structure of 22 developed market countries in North America, Europe, and the Asia/Pacific Region. The index is calculated without dividends, with net or with gross dividends reinvested, in both U.S. dollars and local currencies. Please note an investor cannot invest directly in an index.
The MSCI Emerging Markets (EM) Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets.
The price-to-book (P/B) ratio is a stock's price divided by the stock’s per share book value.
A shares, also known as domestic shares, are shares that denominated in Renminbi and traded in the Shanghai and Shenzhen stock exchanges, as well as the National Equities Exchange and Quotations.
ESG is an abbreviation for Environmental, Social and Governance
Gross Domestic Product (GDP) is an economic statistic that measures the market value of all final goods and services produced within a country in a given period of time.
The Federal Reserve Board ("Fed") is responsible for the formulation of U.S. policies designed to promote economic growth, full employment, stable prices, and a sustainable pattern of international trade and payments.
Emerging markets (EM) are nations with social or business activity in the process of rapid growth and industrialization. These nations are sometimes also referred to as developing or less developed countries.
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