by Tina Byles Williams | Feb 5, 2016 | Market Outlooks
Similar to most other major global markets, 2015 was also largely a year to forget on the frontier. The few bright spots of meaningfully positive local returns (Argentina and Romania) were largely overwhelmed by further currency weakness relative to the U.S. Dollar. Looking ahead for 2016, we see a global sense of skittishness and thin growth leadership as extending to the frontier markets as well, though their lesser lack of integration and correlation with global markets will separate some markets more than others. To that end, the asset concentration within the small universe of global frontier markets managers is our top concern across frontier markets for 2016. Thus at the broadest level, we recommend underweighting global frontier markets vis a vis other clearer opportunities in Japanese equities, but see some genuine opportunities in the frontier universe relative to emerging markets. Otherwise our views here largely reflect our recommendations for medium-term allocations within the frontier universe. As in emerging markets, we expect U.S. dollar strength to continue, and indeed may even be exacerbated by local currency weakness in selected markets (e.g. Nigeria). Saudi Arabia and the rest of the GCC are making headlines for their regional confrontations, both hot and cold, fiscal struggles and influence in the oil market, but also for some peculiar reforms to the stock market. Nigeria is both cheap and expensive in different parts, and could be poised for a truly volatile 2016. Indeed much of the big African stocks seem expensive compared to their European, Asian, or Latin American counterparts, and these stocks seem poised at best for stagnation in 2016 and possibly a significant de-rating. But the universe is not without its bright spots and we see very positive macro fundamentals and micro market catalysts in Argentina, Vietnam, and Frontier Europe (ex Kazakhstan).
by Tina Byles Williams | Jan 1, 2016 | Webinars
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by Tina Byles Williams | Jan 1, 2016 | Market Outlooks
For the most part, 2015 was a forgettable year as growth anemia and disappointment, enduring characteristics of the post GFC period, continued. At 3.1%, global growth once again underperformed IMF forecasts from October 2014 with most of the disappointment emanating from the Emerging world that is most exposed to the slowdown in China and the end of the commodity super-cycle. With notable exceptions of commodity producers such as Brazil and South Africa, inflation also underperformed the 2014 forecast, underpinned primarily by weak demand and the precipitous decline in commodity prices.
by Tina Byles Williams | Oct 1, 2015 | Market Insights Alerts
Since mid-June this year, the wild ride in the Chinese A-share stock market along with deteriorating economic and profit data have unnerved many global investors. Against this backdrop, the Chinese government’s remarkably stable GDP growth reports of 7% for Q2 and 6.9% for Q3 have engendered increasing concern over the credibility of official figures. In an attempt to counter this slowdown, the government has rolled out a series of measures designed to stimulate demand. It has cut interest rates and reduced bank reserve requirements seven times this year, released funds for infrastructure investment, cut taxes on automobile sales and lowered the required down-payment for home mortgages. Historical precedent suggest that as China transitions to a “middle income” economy, the path of least resistance is downward. Based in part on observations from our recent visit to China, in this report, we posit that the key to understanding opportunities and risks in China is to:
by Tina Byles Williams | Jul 1, 2015 | Market Insights Alerts
In China, economic results of late have largely been disappointing, with traditional headline indicators highlighting sluggish growth and mounting deflation risk. Our view is that China is experiencing the economic transition to a so-called “New Normal”, and the prevailing growth slowdown, gauged by traditional industrial-focused indicators, is both necessary and essential for the ongoing economic transformation. In this paper, we will discuss the key priorities of the reform agenda, along with the Chinese government’s progress in implementing these reforms to date. In the last section, we will discuss the nascence of this round of the bull stock market and the recent massive correction, along with our short-term and long-term expectations. The bottom line is that we are positive on China’s economic reform and the government’s efforts in supporting capital market reform. We also believe that there will be more upside in Chinese A-shares, but that the next leg will be characterized by extreme volatility.
by Tina Byles Williams | Jul 1, 2015 | Market Insights Alerts
For 19 years FIS Group has successfully invested with entrepreneurial managers in global equities markets based on the considerable body of research suggesting that talented, high-active share, entrepreneurial managers are best positioned to outperform market benchmarks, net of fees. We believe that there are generally two reasons, both timeless and universal, why this inefficiency will continue. First, entrepreneurs with “skin in the game” are motivated to work harder, as entrepreneurs generally are in every other business across the time and space of human history. Second, in the modern markets of listed equities, size and scale are the enemies of alpha. While we have long known both of these simple (but nonetheless surprisingly ignored) truths to be self-evident in asset management, the significant opportunity of investing with entrepreneurial managers continues unabated. However in our firm’s 19 years of investing and decades more of experience of our principals, we have rarely (if ever) seen so clear a demonstration of both of these sources of alpha in one simple chart.
