Latest from BCA Research

In this insight, we update our thinking on the recent BoJ move in terms of positioning for the yen and JGB yields.

Special Report

The new national unity government in South Africa creates a geopolitical opportunity that investors should not bet against in the short term. A broad-based rally is likely to unfold relative to other emerging markets. However, structural problems and distrust within the new coalition hold out significant risks over the long run.

Special Report

Smart beta or dumb beta? While the debate has been fierce for the US equity market, we investigate the efficacy of smart beta strategies in the overall EM equity universe and 11 individual EM Markets using both bottom-up and top-down approaches. The outperformance of multi-factor strategies in EM is largely driven by their stronger relative EPS. Investors can use multi-factor smart beta strategies to gain EM equity exposures more efficiently.

Global consumer spending is likely to slow over the coming quarters, culminating in a major economic downturn in late 2024 or early 2025. Investors should maintain benchmark exposure to equities for now but look to turn more defensive by the end of this summer.

Our reaction to this morning’s CPI report and this afternoon’s FOMC meeting.

1 in 17 older Americans workers have gone missing either through ‘excess retirements’ or ‘excess mortality’. The consequent dislocation of the labour market means that the Fed’s work is not yet done. We go through some investment implications. Plus: the China and Japan rallies are exhausted.

Special Report

The issue of "industrial overcapacity" in China may be a misconception. Overcapacity in the old-economy sectors has largely diminished, while China's dominance in the global green-energy market reflects its technological advancements and innovations.

Europe did not witness a major policy reversal. Inflationary pressures are coming down, enabling the ECB to cut rates and European states to maintain soft budgets. Geopolitical challenges ensure that European parties continue to cooperate on national defense, economic security, and energy security.

Non-trivial macro divergences have emerged between mainstream LATAM economies. This report compares and ranks Brazil, Mexico, Colombia, Chile, and Peru based on their business cycle outlook, macro policy stance, external accounts, and structural fundamentals. All in all, LATAM risk assets will fall in absolute terms given a strengthening US dollar and a global risk-off move in the coming months. Within LATAM, we favor Mexico, Chile and Peru, are neutral on Brazil, and bearish on Colombia.

We close our overweights to Energy and Aerospace & Defense. The macroeconomic backdrop is deteriorating for Energy. As for A&D, the good news is already priced in.