THE CAPITAL OBSERVER

Emerging Markets Related Articles 2017 

January 2017 (published on the 17th January)

China is still in a period of transition

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Following some retracement late in 2016, we expected that China and Industrial metals should extend up once more late February / March, while on a relative basis, China should recoup some of its recent underperformance during that period. Longer term, following that, we were calling for caution, as for the Chinese stock markets both our absolute and relative charts signaled a correction down into May. On the currency front, we also expected the Yuan to top vs the USD during Q1 2018 and start correcting down along with other USD pairs. All these projection have proven very correct.

February 2017 (published on the 21th February)

Country pair trades related to Oil and the Energy sectors (p28-29)

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Building on the correction we then expected on Oil, we recommended to switch out from Energy related geographical regions towards similar, yet less energy sensitive countries. These projection were aimed especially at Emerging Markets: a witch out of Brazil into Mexico, out of Russia into Poland and out of China into India.

May 2017 (published on the 26th May)

Prepare to Switch back to China and Commodity producers (p30-33)

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We were very positive on Emerging Markets towards year-end 2017, early 2018, which was correct. That said, we had expected an intermediate correction on these from June to late Q3, a timing sequence which was incorrect. On the other hand, we were very correct in identifying China as well as EM Commodity Exporting countries as the possible outperformers into early 2018, at the expense on India and other Asian Growth equity markets.

May 2017 (published on the 26th May)

Chinese Equities could outperform during H2 2017 (p37-40)

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The article catches the lows on China vs the MSCI World, and forecasts its outperformance until early 2018, which was very correct. It support its argumentation with the re-acceleration of Industrial metals we were also expecting (also correct), as well as an intermediate reaction up on the Dollar until early Q4 2017 (which never happened). Indeed, Chinese stock markets outperformed despite a continuously strong Yuan vs the Dollar.

July 2017 (published on the 28th July)

Oil related plays – is it time to buy them back? (p32 -35)

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Although we did see some risk remaining into August, we were pitching a great medium term Buy the Dips opportunity on all Energy related assets towards year-end 2017 / early 2018, especially, we reiterated our shift back to Brazil vs Mexico, China vs India or Russia vs Poland. Our positive calls on the Brazilian real, the Russia Rubble or the Brazilian benchmark bonds did also materialise to a certain extend.

August 2017 (published on the 30th August)

China and base metals are re-accelerating, this trends should continue into H1 2018 (p26-31)

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China and Industrials Metals did lead the reflation trades back up into H1 2018, as written. For Industrial Metals especially, the acceleration has been impressive and did continue until year-end as planned. On these, some retracement into late September/ (early) October even provided the good “Buy the Dips” opportunities we has expected.

November 2017 (published on the 1st November)

China - the motor for reflation II is still humming (p11-16)

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Our concluding remarks to this article stated the following: China, Industrial Metals and related sectors (Diversified Mining) are still on track to outperform until early 2018. These trades may consolidate some during November and more patience is probably required to really capture this outperformance. Indeed, the acceleration may be quite short lived, possibly from early December into late January 2018. These projection were all very correct.

February 2018 (published on the 8th February)

Emerging Markets still look strong strong towards late Q2, yet may underperform until March (p26-31).

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We believe that following the early February sell-off, Emerging markets would probably hold up (which was correct). That said, we also expected them to underperform vs developed markets over the next 3 to 6 weeks (which hasn’t materialised yet, yet could still happen during March). Following that, from late Q1, Emerging Markets should accelerate up again and outperform developed markets probably until late Q2 / mid year (still our view for now).

[Article not yet in free access on the website, yet available upon request]