Viewpoint

Geopolitical tensions, an energy crisis and inflation have marked global activity in 2022. The ball is now in the court of central banks, which in the months ahead will have to quell runaway inflation without risking a global economic freeze.

With central banks speeding though their hiking cycles, a return to rates stability could allow investors to reap the rewards of bond yields that are unusually high for this point in the cycle.

After a decade of underperformance, are emerging markets (EM) equities on the road to recovery? The potential for stronger earnings growth, particularly in Asia, along with a widening differential in emerging versus developed market real GDP growth could be a catalyst for the re-rating of global EM.

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.

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.

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.

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 this fixed income mid-year outlook, Portfolio Manager Carlos de Sousa, explains why the overlooked and much maligned emerging market local-currency asset class may be the phoenix of fixed income.

Here we lift the lid on how typical ESG scoring models work in fixed income, with the help of some real-world examples that will help explain why some companies score well and others poorly. Some of the results will surprise you.

Like the end of a long evening of revelry, the decline in the fortunes of momentum growth and value companies leaves the Quality Growth investors, in our opinion – still standing. Companies with pricing power, low debt, and consistent earnings may be the slow but steady winners in the race to beat the market.

With fears of recession growing, defensive assets like US Treasuries suddenly look to be back in fashion. How can investors prepare their portfolio for recession?