July 2019: Recession vs Reflation

Download PDF: Monthly_201907 “For months investors have been concerned about potential recession in the U.S., yet the stock market is at all time high. How could we reconcile these developments?”, asked one my friend who is working at an asset management company. The effects from reflationary effort from China has yet to be seen andContinue reading “July 2019: Recession vs Reflation”

An Overview of Russia: Oil, External Risk and The Banking Sector

Download PDF: The Linkage between Oil Price and The Russian Economy There is little sign that Russian economy is diversifying from energy production and exports in the last 20 years. The direct link and trickle-down effect of higher/lower oil prices to the economy result in an economy that is highly correlated with the global economicContinue reading “An Overview of Russia: Oil, External Risk and The Banking Sector”

Lessons from Past Equity Market Responses During Periods of High Inflation

Download PDF: Market Responses During Periods of High Inflation Recent crisis in Argentina and Turkey have left me wonder, why does equity markets in local currency terms always corrects during periods of high inflation although in the medium-term corporates are able to maintain their margin through gradual increase of price of their products? My logicContinue reading “Lessons from Past Equity Market Responses During Periods of High Inflation”

June 2019: Searching For The Tipping Point

Download PDF: Monthly_201906 Theme 1: Long Selected Undervalued Countries and Short U.S. Equities. This week U.S. PMI data shows a significant slowdown in the expansion of U.S. economy (manufacturing PMI 50.6 in May 2019 from 56 in the beginning of the year), raising the odds of undershoot of earnings forecast of U.S equities and theContinue reading “June 2019: Searching For The Tipping Point”

Chile: A Case of Investor’s Complacency?

Download PDF: Chile Research Chile has enjoyed a developed economy status over the years, but its growth profile is still hugely cyclical due to dependency on copper export. The country is suffering from twin deficit due to weakness in copper prices and the government’s fiscal condition is deteriorating, albeit at a still very healthy level.Continue reading “Chile: A Case of Investor’s Complacency?”

The Case for Underweighting U.S. Equity

And a Once in a Decade Opportunity to Overweight EM Equity In the last decade, Emerging Markets equity performance has been lagging its U.S. counterparts by a significant 50% margin. Undoubtedly, part of this is contributed by the gain of = hot technology stocks in the U.S. (FAANG). However, currently U.S. earnings growth is peakingContinue reading “The Case for Underweighting U.S. Equity”

Qualitative Screening on Countries Equity Valuation

In this post we highlight several countries equity market and their valuation that we found to be attractive to go long. The countries covered are Brazil, Canada, Germany, UK, Japan, Korea, Mexico, Russia, Turkey and the US. From a cycle point of view, Brazilian equity is in a tough spot. We expect the economy toContinue reading “Qualitative Screening on Countries Equity Valuation”

May 2019: The Dollar Story and Where Are We in the Cycle?

Download PDF: Monthly_2019_April The strength of the dollar has dismayed many investors, us included. The weakening growth in the U.S., as measured by final demand component of the GDP, has pointed downward and should lead to a weaker dollar at a time when China is reflating. We still believe that the current improvement in EuroContinue reading “May 2019: The Dollar Story and Where Are We in the Cycle?”

VIX-Based Hedging Strategy for Emerging Markets Equity Portfolio

Download PDF: EM_VIX_Hedging_strategy EM equities’ superior returns relative to its DM counterparts have been associated with higher volatility and left-tail risk. Rule-based portfolio hedging reduces the severity of tail-risk and performance drag while improving EM portfolio’s risk-return profile over the long run. Currently EM VIX spread over S&P500 VIX is at an all time low,Continue reading “VIX-Based Hedging Strategy for Emerging Markets Equity Portfolio”

Quotes from Hedge Fund Market Wizard

Recently I finished reading a great book by Jack D. Schwager titled “Hedge Fund Market Wizard”. As a note to myself and traders interested to improve their system, here are some quotes that I found to be interesting.   Set stop loss level that would prove the hypothesis is wrong and then limit the positionContinue reading “Quotes from Hedge Fund Market Wizard”