Results for search of category: China

Fizzing or Bubbling?

Everyone is suddenly on bubble alert, but our numbers suggest that the main danger lies in Asian equities, not the US. China, Hong Kong, Taiwan, Korea, India, Japan, Australia and Indonesia all have weekly RSIs above 70%, which is our warning signal. US equities are still below this threshold, apart from Small Caps, which broke above it three weeks ago.  [Read More... ]

How the World Turns

This report is a real-time survey of how the great rotation is progressing in different regions of the world. Our conclusions are (1) Many of the important sector infection points happened back in September; so talking about them now in terms of factors suggests that people missed them the first time round. (2) The UK has much the most aggressive sector rotation and China the least. (3) There are different winners and losers in each region and any attempt to apply one paradigm to all of them is likely to fail. (4) Many value-rich sectors in each region have hardly moved, suggesting that the value trade has already been differentiated into those sectors which have catalysts and those which don’t.  [Read More... ]

10 with 10% in China

We think that global equities could be on the cusp of switching to a new big idea, moving out of US Technology and into something else. It may be US infrastructure, depending on who wins the election and controls the Senate, but the growth of the Chinese consumer has been thrown into sharp relief by the relative impact of Covid on China vs the West. Oil at $35/bbl is a significant stimulus and a similar idea (overweight in EM Equities) worked very well in 2002-05. We have a big overweight on both Consumer sectors in China and we highlight 10 consumer-related companies in Europe which derive more than 10% of sales from mainland China.  [Read More... ]

FAANGs can bite you

We re-iterate our call to take profits in US Tech. We have downgraded Communications to neutral this week and we already have Google/Alphabet as an underweight. The Tech sector broke down through an important technical signal in late August and is now accelerating towards a downgrade. Leading stocks like Microsoft have been downgraded and only Apple looks robust at current levels. The majority of the large stocks we cover have lower scores than they did at the end of summer.  [Read More... ]

Two Red Flags from China

China’s stock market is always subject to official intervention, so the signals need to be interpreted carefully. However, there are two new red flags in our equity sector model, relating to Technology and Financials. Technology has suddenly started to deteriorate, which has historically been a good lead indicator for the US Tech sector. Financials are heading for a multi-year low relative to the index, which could have important implications for China’s FX policy regime.   [Read More... ]

Lessons from a Fast Market

Yesterday’s sell-off was so brutal that it probably marks the start of a different regime in equity markets. We are out of Phase 1 of the recovery and into a second more sceptical and nervous regime. Both the US and the UK broke of out the uptrends in our daily indicator that have been in place since March. The technical situation is better in the Eurozone and Japan, while the level of financial repression is China so severe, in our view, that the indicator has lost most of its signalling power.  [Read More... ]

Asia: First In, First Out

The recent volatility shock is as big as the one in the middle of the GFC and it isn’t over yet. It has also happened three times faster, in three weeks rather than nine. Fear is inevitable, but the are some interesting opportunities, especially in Asia. Countries like Taiwan and South Korea have managed the corona virus better than the US or Europe, while China is already recovering. If you wait for the bounce in the West, you may miss it in the East.  [Read More... ]

Six Sector Ideas

Where to look in advance of the Q3 results season. The macro picture is confused. Our last note argued that we are in the late late-cycle for equities, but we could go on like this for months and there are no new developments to prove or disprove this view. So, our focus shifts to sector selection. We highlight six sector ideas – one from each region we cover – where we think there is potential for a major upgrade or downgrade in the near future.  [Read More... ]


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