Emerging markets (EM) slid from February through the year-end on the back of a stronger dollar, an escalating trade war and notably weaker growth in China. However, we see evidence that these previous headwinds may now be turning into tailwinds.
The return of negative bond/equity correlations was a rare silver lining for multi-asset investors in 2018.
The MSCI AC Asia ex Japan (AxJ) Index fell by 2.6% in USD terms in December, as concerns about slowing global growth, tightening monetary policy and rising geopolitical tensions continued to drive sentiment.
The S&P/ASX 200 Accumulation Index returned -0.1% during December.
The Australian bond market (as measured by the Bloomberg AusBond Composite 0+ Yr Index) was up 1.50% over the month, outperforming Australian equities which fell 0.12%.
The word “volatility” crops up a lot when commentators try to explain price movements in financial markets.
While New Zealand markets have had a rather interesting and more volatile time, the main drivers of the economy remain sound.
As we wrap up the final weeks of 2018 and look ahead to whatever challenges lay ahead next year, we can’t help but reflect on what has been a testing and frustrating year for investors.
US Treasuries (USTs) registered gains in November, while yields fell along with faltering US equities.
While it is true that the Fed will be criticized no matter what it does tomorrow, it could limit criticism to mild levels if it hikes only 10 bps.
John Vail, Chief Global Strategist for Nikko Asset Management, contributes a regular column to Forbes.com