Some highlights from Q3 2014 Market Spotlight:
The Global Picture
- The recovery goes on, but more slowly than we expected it to do.
- The U.S. was until recently in “active deleveraging,” or a decline of nominal debt balances. That phase is over in the U.S., but continues in Europe.
- Secular adjustment, the third force shaping today’s economy, will likely stay with us for years. Adverse demographics and a long-running productivity slowdown have lowered the neutral rates of growth, real interest, and inflation.
- In Q4 disinflationary forces dominate. One driver is oil prices. In Japan and the eurozone, lower inflation will persist unless the euro and yen depreciate further.
- The emerging markets outlook might be darkening. On one hand, gradually improving demand from advanced economies would lift exports. On the other, Chinese growth is unlikely to pick up.
- Recent elections in some EM countries, Brazil and India for example, won’t be panaceas. Indonesia is more resilient now to financial outflows and interest rate hikes than it was a year ago.
A Look at Local Markets
- While Asia-Pacific regional benchmarks sank in the third quarter, some markets surged ahead.
- In particular, China and Japan snapped back from weak Q2 performance, while India and Thailand continued their winning ways.
- In India, stocks rose 4.79% in Q3, well ahead of the region wide increase for the quarter. Investors continue to buy India’s reform story under newly elected Prime Minister Narendra Modi.
You can click here to read the complete Q3 2014 Market Spotlight.
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