Macro Highlights September 7th 2015

Analysis - 9/7/2015

Our Investment Research Department publishes a weekly newsletter with a round-up on the main economic developments and news flow.

Markets: don’t listen to what economists tell you...

Markets had another tough week, at the tail end of a technical rally that lasted but a few days. Investors are hesitating – and who can blame them – to buy financial assets at current valuation peaks, as good news from Europe has failed to counter concerns emanating from the US and Asia. (...)

Developed countries: countries most exposed to China

The question on everyone’s lips in recent months – or, to be honest, for years – is whether a slowing Chinese economy will drag the rest of the globe into recession? To provide a clear answer, several points must first be made. A Chinese economy that is growing strongly provides a safety net for global economic growth. Those countries that trade with China, which means virtually every country on the planet, are hit when Chinese economic activity slows, exporting less during hard times than when the Chinese economy is booming. From this standpoint, Australia and Japan but also Germany and Switzerland are the most exposed developed countries. Asian economies of the likes of Korea, Singapore, Indonesia and New Zealand, along with Russia, round out this list of losers. (...)

Emerging-Market currencies: still going strong out east

The mid-August correction across financial markets has whittled down the value of emerging-market (EM) currencies relative to the US dollar. But not all EM currencies are in the same basket, so to speak. Even though aversion to risk-taking is on the rise, some have actually chalked up appreciation – or at the very least curbed depreciation – versus the almighty greenback. And most can be found in the emerging-Europe space. (...)