Equities

EM GDP growth remains higher than the rest of the world, EM central banks have been more proactive than developed markets in managing inflationary pressures, and the US dollar’s precipitous rise this year has had a greater impact on developed country currencies vs. emerging markets.

Asset owners are increasingly demanding net zero plans from their investment managers, who need to determine how to track and reduce portfolio emissions. Issues include: rebalancing vs rate of reduction, whether it’s too early for Scope 3, and ensuring engagements go beyond the more receptive European and US markets.

Higher than expected inflation data for August is setting the stage for the upcoming Federal Open Market Committee meeting. Where do we see the Fed policy rate at the end of 2022? Watch Eoin Walsh and Ramiz Chalet discussing their views on inflation and Fed-policy.

How much do listed companies contribute to emissions? We estimate they account for about 16.9 billion tons of greenhouse gases compared to a global total of 46.3 billion tons annually. These are needle-moving volumes. Investors can make a difference by working with management teams to encourage abatement plans.

High inflation creates the illusion of falling carbon intensity, a common measure used to track greenhouse gas emissions from portfolios. It is critical for investors who are targeting Paris Aligned reductions to adjust for this issue. By using alternatives to revenue-backed carbon intensity tracking metrics, we can help maintain data integrity and save years of progress.

The circular economy, popularized by expressions such as “zero waste”, “right to repair”, or “from farm to fork”, is rooted in the knowledge that resources are finite. Companies that manage to reduce their consumption of raw materials are likely to increase their profits and market share, which will ultimately benefit investors. Past examples of corporate successes based on the circular economy include the Italian Vespa scooter.

Discussing sustainability matters with Chinese companies is rewarding and challenging. Part of it is fact-finding, part of it is education. But investors need to tread with caution, and little extras such as talking Chinese help, says Hong Kong-based ESG analyst Gayle Chan. She also explains the approach of mtx Equities, citing a concrete example.

Lofty pledges of governments to “go green” often hit a snag in parliament. However, there are also success stories like that in the US, where lawmakers backed a proposal to cut carbon emissions by roughly 40%. The plan, just signed into law by Joe Biden, could boost domestic wind and solar companies, potentially also benefiting “impact investors”.

Over the past few months, our models have ditched equities, pushing allocation to levels close to or even below zero. The main reason for this is the hawkish turn in central bank policies against inflation which has put an end to easy money and high-flying growth expectations in the market. Now the question is, when do we go back to the market and why?

Thematic investing enables investors to direct capital towards solving mankind’s biggest challenges. In this White Paper, portfolio managers Daniel Maier and Romain Hohl dive deep to find out what it offers investors, discuss choice of single or multi themed investments well as the challenges and outlook for thematic investing.

How can you find growth in times of panic? Difficult markets are not to be feared. Investors need an optimistic resolve and a clear roadmap: identify businesses with sustainable and predictable earnings streams, pricing power, and lower leverage, and avoid stocks trading at exorbitant multiples that are vulnerable to higher discount rates.

In 2021, Asian internet stocks, dragged down by Chinese blue chips, massively underperformed their US peers. But the valuation chasm between Asia and the US has narrowed of late. With Chinese regulators easing their grip, the country’s internet stocks may be bottoming out, which could be an opportunity for able stock pickers.