Investment Themes

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Investment Theme – German, Italian exports most exposed to strengthening euro, Netherlands cushioned

Posted on August 17, 2017 at 9:34 am GMT

In times of a strengthening euro, the region’s exporters could be hurt as sales generated outside of the eurozone may translate poorly back into earnings reports denoted in euros. The biggest export countries with the least exposure to the single currency zone could be dented the most. Germany and Italy are some of the world’s largest exporters, yet they have the smallest amount of exports delivered within the eurozone. By contrast, the Netherlands outperforms them with more than 50% of revenues generated [..]

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Investment Theme – Mixed UK data and Brexit uncertainty cloud outlook for sterling

Posted on August 16, 2017 at 3:08 pm GMT

After being criticised by EU officials for turning up at the negotiating table unprepared, the UK has this week published its most comprehensive vision yet of a post-Brexit relationship with the bloc. The British government published yesterday its first policy paper on a future customs agreement with the European Union, and is due to soon release a paper on Northern Ireland and its border arrangements with the Irish Republic. The paper calls for a new customs partnership with the EU [..]

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Investment Theme – Has Swissie bid goodbye to its highs for good?

Posted on August 2, 2017 at 12:59 pm GMT

After two years of relative stability, the safe-haven swiss franc came into the spotlight again when it came under pressure against the euro last week and broke out of its long-term range. The much-desired weakness will likely be welcome by the Swiss National Bank which longs for a more export-competitive currency. However, the swissie remains “overvalued” as the level of risk aversion in the markets remains quite high despite investors’ rising appetite for riskier assets.  The question arising now is [..]

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Investment Theme – Weakening dollar helps US exporters; lack of Trump reforms disappoints domestic-orientated firms

Posted on August 2, 2017 at 9:33 am GMT

US companies with large revenue exposure to exports could get a significant boost to their top-line amid the weakening dollar. At the same time, investors could start losing interest in companies that have a limited international footprint and are mostly focused on the US market as Trump-promised business reforms and fiscal stimulus get delayed. The percentage of S&P 500 companies’ sales from foreign countries was 43% in 2016, with the energy and technology services sectors topping the list. The US dollar fell following last week’s [..]

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Investment Theme – Dovish Fed spurs commodity prices and currencies higher

Posted on July 27, 2017 at 4:06 pm GMT

Commodity currencies are looking at their most bullish since 2015 after the Federal Reserve struck a dovish tone on inflation at its latest monetary policy meeting yesterday, lifting the price of risk assets, including those of commodities. Commodity prices have already been on the up during the past month, boosted in part by growing demand from China – the world’s biggest consumer of commodities. This uptrend has helped drive commodity-linked currencies such as the Canadian, Australian and New Zealand dollars [..]

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Investment Theme – What now for the dollar as tax cut hopes fade after health bill collapses?

Posted on July 19, 2017 at 3:55 pm GMT

The slide in the US dollar intensified this week after the Republicans’ attempt to push through their healthcare reform plan in the Senate failed for a second time. The defeat came after two more Republican Senators opposed the legislation on Monday, adding to the two Senators who had already said they would not vote in favour of the latest version of the bill. Given the Republicans’ slim majority of 52-48 in the Senate, the party cannot afford to lose more [..]

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Investment Theme – BoC acts as the Fed’s dancing mate – will others join the party?

Posted on July 14, 2017 at 2:57 pm GMT

At the start of the year, the Federal Reserve was the only major central bank engaging in as well as communicating that it remains on a path of policy normalization. At that point in time, the Fed had already hiked rates twice since last reducing them back in 2008, while it has delivered two additional rate increases so far during the year. The Bank of Canada’s decision to raise rates for the first time in roughly seven years could be [..]

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Investment Theme – Tale of two continents as dollar heads for a chill summer and sun may shine on euro

Posted on June 29, 2017 at 11:55 am GMT

The dollar weakening might further unfold in the coming months amid the latest economic and political concerns. Investors’ are increasingly worried that many of the promises President Trump made during his presidential campaign will not be materialized. The greenback has fallen 4% against the yen since the beginning of the year, while the dollar index is down 6%. The assurances of big tax cuts, massive infrastructure spending and deregulation that President Donald Trump gave during his presidential campaign are being questioned after [..]

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Investment Theme – Sterling weighed by uncertainty of Brexit talks and unlikely rise in interest rates soon

Posted on June 21, 2017 at 3:14 pm GMT

The British pound has been weighed by political uncertainty that has been brought about by Brexit as well as the inconclusive outcome of the snap general election that took place on June 8 that resulted in a hung parliament. Sterling has been unable to recover from its tumble of almost two and a half cents against the dollar on the Monday after the vote, which took it to the $1.26 handle from above $1.29 before the elections. Aside from a [..]

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Investment Theme – Intense tech sell-off an end to incredible rally or mere profit-taking?

Posted on June 12, 2017 at 3:06 pm GMT

The sharp drop in technology stocks on Friday acted as a drag on major Wall Street indices, predominantly on the Nasdaq Composite, an index heavily-weighted towards information technology stocks. The IT sector was, prior to last week’s setback, dominating share price growth in US equity markets during the course of the year. It is also interesting that the sell-off that took place towards the end of last week’s trading was particularly noticeable among the biggest names in IT. Stocks in [..]

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