26.04.2024, 15:39 Uhr
Beim Versicherer Baloise gibt es keine Eintragungs- und Stimmrechtsbeschränkung für Aktionäre mehr. Die Aktionärinnen und Aktionäre haben an der Generalversammlung überraschend einer Abschaffung der seit den...
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Only market participants change their behaviour due to geopolitical tensions
On 11th August 2017, Samir Mehta, Senior PM of the JOHCM Asia ex Japan Fund, has put together a few comments regarding the current geopolitical tensions on the Korean peninsula.
- North Korea and its threats have existed before.
- What is different is Mr. Trump and the unpredictability of what he might do. My personal opinion is that this escalation of words is driven by his need to secure a win given his stumbles on almost all his domestic policy issues so far.
- A related possibly reason for this rhetoric from Mr. Trump could be to push China to give him some wins on trade.
- Unless we do see an escalation leading to conflict, this playbook has been repeated several times before. Itusually results in panic and subsides.
- Businesses do not change their behaviour due to geopolitical tensions only market participants do. Riskperceptions for asset values change.
- On the core part of the portfolio I am not changing anything. Consistent with what I have mentioned in the recent past, reducing India and adding to Malaysia and selectively in HK/China but not because of this tension.
- On the cyclical side, yesterday and today I have added to Korean financials. As part of my changing stance on financials in the region (ex-India), I am of the opinion that there is good reason to own Korean financials. NPL cycle has possibly peaked; cost cutting is progressing for the first time in a long time; fee income has been growing and potential margin surprise is possible. Valuations have and remain cheap. Do I make one or two of them even as part of my Core portfolio is a debate I havent settled yet.
- The variable to monitor is the US$. A benign start to the year for Asia is partly due to a depreciation of the US$. But recently, that sell off led to an overstretch on the downside. Is this a pullback/strengthening of the US$ just the result of an oversold position or does this move result in a medium term reversal?
- I am managing the cyclical risk on the basis this is a pullback NOT a reversal in the US$ trend.
- In times of stress, especially liquidity or economic stress as well as geopolitical stress, the US$ has been a safe haven in the past and I will, like all of us, have to monitor what Mr. Trump does to take a call on whether we should be a lot more cautious.
