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Fri12152017

Last updateSat, 29 Jul 2017 12am

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Selloff in Government Bonds May 2015

Due to unconventional policy easing (quantitative easing) taken by global central banks, bonds have been among the best performing asset classes in recent years.  But a big sell-off in the government bond markets is happening from Germany to Australia.  On 2015-04-15, the first to "predict" the "sell off" of German Bund was Doug Kass, Head of Hedge Fund Seabreeze Partners Management.  Then on 2015-04-21, Bill Gross agreed and tweeted the German bund as "the short of a lifetime".  Thereafter, on 2015-05-01, Goldman joins Gross on Bund View.

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Will European Banks benefit from ECB’s QE?

Eurozone banks are down 15% in the past 4 months due to the speculation on European Central Bank’s (ECB) quantitative easing (QE) programme.  Question is will the European Banks benefit from the ECB’s move?

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Is US High Yield a risky investment?

“What is the most hated investment class in the market? EM equity? Probably that has happened already. EM bonds? So has that. US high yield seems more at risk than emerging markets.” - Tanguy Le Saout, Head of European Fixed Income of Pioneer Investments.

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China is cheaper than Turkey!

The resent relatively indiscriminate selloff in emerging markets, made China’s shares cheaper than Turkey and Argentina.  With an estimated 2014 P/E (price-to-earnings ratio) of 8.1, China is the cheapest major market in the world on a forward-looking P/E basis!  MSCI Emerging Markets Index’s P/E is about 10.

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Will the Small Cap continue its rally?

Over the very long term, smaller companies tend to outperform.  Academically, it have been demonstrated exhaustively.  According to the Russell Indices, widely used as the benchmark for smaller companies in the US, the Russell 2000 index of small-cap stocks has outperformed the “Top 50” of mega-cap stocks by 163% since the beginning of 2000.  The 2000 has gained 118% since then, in price terms: the Top 50 is down, remarkably by 18% since then.  So far this year, Russell 2000 is up 31.1% whereas the Top 50 generated 22.9%.  In developed Europe, small-caps gained 28.5% in US$ terms against 17.8% for large-caps.  Will the small cap continue to outperform the large cap?

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