ETF Securities Research Blog

China A-shares finally in after four attempts

MSCI  has finally decided to include China mainland companies in its MSCI Emerging Market benchmark. While some obstacles that have prevented A-shares to be included in the past remain, many have been removed. As a result of the inclusion, A-shares stocks may benefit from short-term bet. We however believe that a credible reform agenda and adherence to it would be a stronger support for domestic companies over the longer run.

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Central banks: hear no inflation, see no inflation, speak no inflation

While global inflationary expectations have moderated as a risk-on mindset has gained momentum following the French Presidential first round vote, actual inflation is surprising to the upside. While the Bank of Japan (BOJ) and European Central Bank (ECB) have met investor expectations for policy announcements in recent days, the US Federal Reserve (Fed) could disappoint at its June meeting. Read more…

Frexit less likely but domestic challenges

Market’s participants welcomed the lead of Macron in the first round of the French presidential elections. The euro jumped 1.3% and French equities are up 4% led by French banks. We believe the excessively high OAT-Bund yield spreads will continue to tighten gradually as we get closer to the second round of the presidential elections and the Parliamentary elections. Read more…

April 2017: Getting more constructive on US assets

For April, our equity model suggests to remain neutral on US equities for the first time since August 2016. Our bond model suggests increasing allocation to government bonds as well as US investment grade corporates, while remaining neutral on US high yield as CDS levels are rising. The commodity model is going underweight all commodity sectors with the exception of industrial metals and livestock (see table below). Read more…