Three Topics on Investors' Minds

Investing through inflation, less liquidity and a slowing China

Investors are facing a much more volatile environment than a year or so ago. Geopolitical tensions, a Chinese economy looking at growing headwinds and rampant inflation which is pushing central banks to tighten monetary policy which, in turn, reduces liquidity levels are all macro forces that worry global investors. Navigating these dynamics successfully can make all the difference when seeking to allocate capital efficiently.

Inflation

Investing Across Deflation, Inflation and Stagflation (Robeco)

Factor returns seem to be little affected by inflationary forces. As such, they can act as a diversifier during periods of high inflation, including stagflation.

A Bigger Boat – Market views from BlackRock Systematic Investing

For compliance reasons, this paper is only accessible in the United States

Navigating the new inflationary environment requires investors to rethink some of their capital allocation decisions. BlackRock offers an alternative perspective.

Inflation Update: Approaching a Sticky Peak (Insight Investment)

For compliance reasons, this paper is only accessible in the United States and Canada

Some data points suggest headline inflation might have peaked, though Insight Investment would not advise investors to expect markets to return to ‘normal’ anytime soon.

Video: More Stormy Weather in H2 2022? (Columbia Threadneedle Investments)

This outlook for the remainder of 2022 discusses the main macro forces likely to shape the rest of the year, including inflation which may remain with us for a while.

Market Liquidity

Central Bank Auctions and Bill Market Liquidity (ECB)

Central bank policies are closely linked to market liquidity which, in turn, impacts asset price levels. The ECB looks at the link between monetary policy and bill market liquidity.

The Fed’s International Dollar Liquidity Facilities: Roles and effects (VoxEU)

An in-depth look at the tools the Federal Reserve uses to supply U.S. dollars to the rest of the world in order to meet international demand for the greenback.

The Liquidity Hole is Expanding (Bridgewater Associates)

Bridgewater sounds the alarm that tighter monetary policy will soon mean less liquidity in the financial markets. This liquidity gap can dislocate asset prices.

China: Headwinds & Opportunities

The Risks Around China’s Grassroots Mortgage ‘Boycott’ (BNP Paribas AM blog)

China's latest real estate crisis sees a rising number of homebuyers withholding mortgage payments because new homes are delivered late. What are the risks from this for investors?

China’s Policy Tailwinds Set Economic Recovery in Motion (Manulife IM)

For compliance reasons, this paper is only accessible in certain geographies

This paper explores how easing Covid restrictions and economic stimulus measures over the first half of 2022 have put the Chinese economy on a promising path for the rest of the year.

Lockdowns at Home Paralyse China’s Global Investment (AEI, 2022)

Chinese outbound investment appears still to be hamstrung by domestic Covid lockdowns. A study of the impact on the country’s worldwide acquisitions and construction projects.

A Closer Look at China (Verus Investments)

Verus looks at the ‘China story’ over the last 20 years, digs deep into the ‘outperformance thesis’, and identifies the main opportunities and threats for investors going forward.