Quo Vadis – where to – Britain?
It is almost exactly a year since Britain’s electorate voted to leave the EU. In the 12 months since, extraordinary consumer resilience first catapulted the UK to the top of the G7 growth league and then returned the nation down to the bottom end. Likewise, in politics, what started with an embarrassing political meltdown, developed into what looked like it would be the biggest political majority in generations, only to crumble back down into embarrassment and uncertainty.
Oil’s supply soap opera
Oil prices officially entered bear market territory, having fallen more than 20% since the beginning of the year. This also marked a 7-month low, as Brent Crude prices dropped down to the $45 per barrel mark for the first time since last November. Since the lows seen in January 2016 – when Brent hit 28$/bbl and WTI Crude sunk to 29$/bbl – oil prices had been holding steady around the $50-$55 range, with prices moving sideways on the upper bound of that range from December until March this year. Since March, however, Brent has experienced a 20% fall – now officially into bear market territory.
Japan – An arrow headed in the right direction
With Japanese stock markets up around 25% over a year and 6% year-to-date (in local currency), investors’ faith in Premier Abe’s third arrow of Japanese economic/social reform continues to gain momentum. This week, data on industry activity positively surprised, rising 2.1% month-on-month for April compared to the widely expected decline. Later in the week, manufacturing forward indicators, in the form of PMI’s, also remained positive, which means Japanese manufacturing has expanded for 10 consecutive months and is now at levels not seen since 2013.
China capital market opening 2.0
Last week, we wrote about a Chinese capital market initiative to open the domestic bond market to international investors. This week, it was the equity market that drew investors’ attention. MSCI, the leading provider of global equity indices, announced that it would (at long last) include mainland Chinese stocks in its global equity benchmark index, the MSCI Emerging Market Index, commencing in 2018. They had rejected this notion on three previous accounts, due to concerns surrounding liquidity, volatility and poor general oversight from the Chinese authorities and exchanges.
Amazon’s increasing global dominance – good or bad?
Amazon, the ‘T-Rex’ of the online retail world, made its most significant step yet into the food retail sector this week, with a $13.7 billion purchase of premium organic supermarket chain Whole Foods. Analysts see the move as the US internet giant getting serious about entering the general retail industry by bringing its own brand of disruptive technologies to dominate yet another sector.
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