Global Asset Allocation, Politics & Governance, Ecstrat

John-Paul Smith

Global Asset Allocation, Politics & Governance

Ecstrat

Ecstrat is a consultancy advising on asset allocation between global equity markets, with a focus on the intersection of governments, geopolitics, governance and markets.
 
Over the past few years and more especially since the Great Financial Crisis (GFC), investors have become more focused on short-term market movements and real-time returns and have consequently neglected the analysis of the underlying structural themes that underpin longer term performance.
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More specifically we believe that the evolution of governance-based relationships between investors, controlling shareholders, labour and the state is one of the primary determinants of both relative and absolute performance between individual equity markets.
 
We will endeavour to provide investors with some of the context surrounding governance-related issues which encompass many different disciplines including history, economics and political science, as well as the financial metrics which are the most obvious manifestation of the structural characteristics of each market.
 
We will pay particular attention to the shifts and potential inflection points for governance in individual markets as these are often the best lead indicators for both economic and market performance.

Cross Asset Strategy

<h2>India (neutral); bull and bear factors remain finely balanced before election</h2>The deterioration in India’s macro-economic ratios has continued apace with further rises in energy prices compounded by the fall in the value of the <a href="https://www.smartkarma.com/entities/22832" target="_blank" data-smartkarma-citation="entities:22832:1">INR (USDINR CURNCY)</a>. The most pronounced deterioration has occurred in the fiscal deficit which now stands at 6.5% or 7% and rising, if the regional deficits are fully accounted for, compared with an average of 5.5% during the 2009 to 2013 period with government debt standing at 70% of GDP.The current account deficit has also widened with forecasts up to 2.8% of GDP for the fiscal year ending in March 2019, but this still compares favourably with just under 5% recorded in 2013, whilst the current core CPI inflation rate of around 5.8% is significantly below the 10.1% average recorded between 2009 and 2013. The perception that the RBI is behind the curve in terms of monetary tightening, will begin to dissipate if UST yields and oil prices continue to fall.

India (neutral); bull and bear factors remain finely balanced before electionThe deterioration in India’s macro-economic ratios has continued apace with further rises in energy prices compounded by the fall in the value of the INR (USDINR CURNCY). The most pronounced deterioration has occurred in the fiscal deficit which now stands at 6.5% or 7% and rising, if the regional deficits are fully accounted for, compared with an average of 5.5% during the 2009 to 2013 period with government debt standing at 70% of GDP.The current account deficit has also widened with forecasts up to 2.8% of GDP for the fiscal year ending in March 2019, but this still compares favourably with just under 5% recorded in 2013, whilst the current core CPI inflation rate of around 5.8% is significantly below the 10.1% average recorded between 2009 and 2013. The perception that the RBI is behind the curve in terms of monetary tightening, will begin to dissipate if UST yields and oil prices continue to fall.

Asian Equity Markets (Ex-China) Overview; Korea, Taiwan and India

Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

Our EM FX cascade call is seeing increased USD bull momentum in Asia as weaker currencies buckle and bleed into the SGD and KRW.  Mounting equity selling pressure in Asia and we have yet to break TRY and RUB triangle patterns for a bigger USD push and FX buckle.Price action in China/Hong Kong implies we reach for new lows into our base case cycle trough due in September. Impulsive bear turns noted in Korea, Singapore and Indonesia. India break of trend support.EEM - Reaching for that 40-41 target zone which must be linked with a chart peak in EM FX while holding NDX 7,500 for any sign of a low. If we break NDX 7,500 then we press lower across the board and see DM's close the margin with EM's. Watch NDX 7,500, representing a key pivot level for tech globally.This webcast covers important break points and synergy as we move into a more volatile September.

Our EM FX cascade call is seeing increased USD bull momentum in Asia as weaker currencies buckle and bleed into the SGD and KRW.  Mounting equity selling pressure in Asia and we have yet to break TRY and RUB triangle patterns for a bigger USD push and FX buckle.Price action in China/Hong Kong implies we reach for new lows into our base case cycle trough due in September. Impulsive bear turns noted in Korea, Singapore and Indonesia. India break of trend support.EEM - Reaching for that 40-41 target zone which must be linked with a chart peak in EM FX while holding NDX 7,500 for any sign of a low. If we break NDX 7,500 then we press lower across the board and see DM's close the margin with EM's. Watch NDX 7,500, representing a key pivot level for tech globally.This webcast covers important break points and synergy as we move into a more volatile September.

Further Signs of Contagion Seeping into Asia

Our EM FX domino call is unfolding and seeing USD bull energy rolling into Asian FX in a sequence that flashed red flags in early 2018 and more recently in early July (TRY bull triangle) for a broadly stronger dollar with EM panic. Today we will outline levels that would induce a higher degree dollar rise in Asia above our natural target levels slated for September.USD/TRY has moved above 7.0 this morning as further contagion is expected given the DXY just broke out of the flat range. Erdogan…

Our EM FX domino call is unfolding and seeing USD bull energy rolling into Asian FX in a sequence that flashed red flags in early 2018 and more recently in early July (TRY bull triangle) for a broadly stronger dollar with EM panic. Today we will outline levels that would induce a higher degree dollar rise in Asia above our natural target levels slated for September.USD/TRY has moved above 7.0 this morning as further contagion is expected given the DXY just broke out of the flat range. Erdogan…

<figure class="editor-figure mceNonEditable"><img class="editor-image img-responsive" src="https://static-prod.smartkarma.com/images/media/000/057/903/original/CP%20header.jpg?1531720935" data-smartkarma-image-id="57903"></figure>The following webcast outlined our USD bull positioning and rally targets into a USD peak cycle with a focus on Turkish Lira fresh weakness adding fuel to USD strength in Asia as we moving into our slated July USD peak zone that will align with equity lows in Asia to set up an inflection. TRY plays a key role as does the USD/JPY breakout above 111 (resuming the macro bull cycle). We also outline pivot zones and the USD/CNH target.To view click on this link: <a href="http://www.screencast.com/t/DjBbRAfBpP" target="_blank">http://www.screencast.com/t/DjBbRAfBpP</a>…

The following webcast outlined our USD bull positioning and rally targets into a USD peak cycle with a focus on Turkish Lira fresh weakness adding fuel to USD strength in Asia as we moving into our slated July USD peak zone that will align with equity lows in Asia to set up an inflection. TRY plays a key role as does the USD/JPY breakout above 111 (resuming the macro bull cycle). We also outline pivot zones and the USD/CNH target.To view click on this link: http://www.screencast.com/t/DjBbRAfBpP…

Korea Stock Exchange KOSPI 200 / Technical Analysis

Korea Stock Exchange KOSPI 200 (KOSPI2 INDEX EQUITY)

<figure class="editor-figure mceNonEditable"><img class="editor-image img-responsive" src="https://static-prod.smartkarma.com/images/media/000/055/660/original/CP%20header.jpg?1529578972" data-smartkarma-image-id="55660"></figure>This webcast runs through our short positioning in Asia and where we are adding short exposure.Asian bear pressure has notched higher amid the call for broader USD strength and trade friction. Last week, we noted increased odds of selling pressure due to redemptions/outflows which will have a lingering impact.S&amp;P 2,800 fade hit our 2,745 short to long turn target. The rise toward 2,800 resistance is an opportunity to place a fresh short hedge on our long tech positioning. We placed a short at…

This webcast runs through our short positioning in Asia and where we are adding short exposure.Asian bear pressure has notched higher amid the call for broader USD strength and trade friction. Last week, we noted increased odds of selling pressure due to redemptions/outflows which will have a lingering impact.S&amp;P 2,800 fade hit our 2,745 short to long turn target. The rise toward 2,800 resistance is an opportunity to place a fresh short hedge on our long tech positioning. We placed a short at…

South Korea

The South Korean won is the official currency of The Republic of Korea (South Korea). 

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KRW (USDKRW CURNCY)

Asian Equity Markets (Ex-China) Overview; Korea, Taiwan and India

India (neutral); bull and bear factors remain finely balanced before electionThe deterioration in India’s macro-economic ratios has continued apace...

John-Paul Smith

Further Signs of Contagion Seeping into Asia

Our EM FX cascade call is seeing increased USD bull momentum in Asia as weaker currencies buckle and bleed into the SGD and KRW. Mounting equity...

Thomas Schroeder

Degrees of TRY Contagion

Our EM FX domino call is unfolding and seeing USD bull energy rolling into Asian FX in a sequence that flashed red flags in early 2018 and more...

Thomas Schroeder

TRY Fuel for USD Strength in Asia

The following webcast outlined our USD bull positioning and rally targets into a USD peak cycle with a focus on Turkish Lira fresh weakness adding...

Thomas Schroeder

Tactical Short Targets in Asia

This webcast runs through our short positioning in Asia and where we are adding short exposure.Asian bear pressure has notched higher amid the call...

Thomas Schroeder

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