Matthews Asia - Asia Insight
Matthews Asia is an independent investment management firm focused solely on investing in Asia. They specialise in actively managed, bottom-up portfolio management, with a focus on generating long-term investment performance.
CIO Outlook: Bucking the Trends
In 2018, will the U.S. market continue to power up on expanding margins? If so, what does that mean for the rest of the world’s economies? Matthews Asia CIO Robert Horrocks, examines the factors behind the most likely scenarios.
"2018 might be a year when the style of portfolio flows into Asia's economies starts to change. It may also be that Asia is once again seen as a separate region from the emerging markets."
Summary:
- U.S. bull market is petering out. It has done well on a mix of low interest rates and strong earnings growth, which in return has relied on moderate wage increases and expanding corporate margins.
- Europe could see continued reasonable earnings growth. Economies are operating below their potential to a much greater degree in Europe and so the “catch up” ought to be able to continue.
- Japan and China will continue to reflate their economies. Japan has the ability to be more aggressive on this front. China, however, can also be comfortable with inflation in the 2% to 3% range.
- A significant aspect of Asia’s economies over the past five or six years has been the extent to which Asia’s policymakers, in stark contrast to the West, have been determined to restore labor’s share of economic growth by raising minimum wages ahead of the rate of economic growth.
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