Forward Thinkers

China: don't panic, hedge instead

China: don't panic, hedge instead

James Spence, managing partner of Cerno Capital, comments on how investors should respond to moves in the Chinese economy

In terms of long-term investment in China, investors should not make the mistake of assuming there is some cohesive plan in Beijing - there is not. The question is whether to take official comments at face value. The People's Bank of China (PBOC) has been somewhat trapped by its own logic. By referencing offshore rates they have made three weaker fixes in the world before changing their minds on the third day.

In terms of risks to further RMB currency weakness, reduced purchasing power from China may remove an element of global corporate profit growth. This in turn crimps returns from the only remaining prospective asset class: equities.

Investors should look to increase currency hedges out of Asian domiciled investments, and increase hedges back to GBP and USD. They should also ensure their portfolios are not solely exposed to growth equities, but diversified by both geography and style.

 

Forward Thinkers

CME Group, the world's leading and most diverse derivatives marketplace, says it will launch seven-year and 20-year US Dollar Deliverable Swap Futures (DSF) on September 28, 2015. 

Forward Thinkers

By Valentijn van Nieuwenhuijzen, Head of Multi-Asset at NN Investment Partners

Talk about a currency war, doubts about Chinese policymakers’ credibility and worries over the Chinese economic slowdown and its ripple effects have ignited risk aversion among investors. 

Forward Thinkers

Western declines a knee-jerk reaction

The declines in Western stock markets have been a knee-jerk reaction in thin summer trading, says John Chatfeild-Roberts, head of the Jupiter Independent Funds Team. In a just-issued short note, he comments on events in China and suggests where to find value once the dust has settled.

Forward Thinkers

US Corporate Bond Trading Technology Update: The End of the Beginning is a new report from Celent, authored by Brad Bailey, a research director with its Capital Markets practice.

Forward Thinkers

Broker-dealers and the need to adapt

To remain competitive in today's financial advice industry, broker-dealers must recalibrate their relationships with their advisors to according to a white paper released today by Pershing LLC, part of the BNY Mellon group.

Why Teams Are the Client of the Future for Broker-Dealers points out that changes in the advisor-client of the modern broker-dealer present different challenges and opportunities that broker-dealers must navigate.

Forward Thinkers

Speaking on the current market volatility, Valentijn van Nieuwenhuijzen, Head of Multi-Asset at NN Investment Partners, says: "In the aftermath of the shocking devaluation of the Chinese currency, markets remained focussed on fragility in the broader emerging market complex.