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  • October 30, 2018
    Equities
    Short-term Volatility Masks Underlying Strength In EM
    Gary Greenberg
    The tailwinds supporting emerging markets (EM) through the early part of the year gave way to headwinds and headlines of trade disputes, spiralling currencies and declining growth rates over the summer. In his latest note, Gary Greenberg, Head of Emerging Markets at Hermes Investment Management, explores the macro fundamentals underpinning the EM business environment, which remain more robust than the recent volatility might suggest.
  • June 27, 2018
    Equities
    Latin America’s new liberals
    Gary Greenberg
    Revelations of corruption and profligacy have undermined the leftist governments of Latin America, angering electorates which have seen economic growth fall with the commodity cycle The political right is resurgent, appealing to a renewed desire for fiscal discipline and sustainable growth based on orthodox economic policies and less reliance on the boom-bust resources trade Stock markets have surged, particularly in Argentina and Brazil, where new centre-right governments aim to implement reforms that should support growth in corporate earnings Is this rally driven by political promises, or are strong foundations for long-term growth being built? We are optimistic but also cognisant that Latin America’s new liberals have plenty of work to do
  • August 16, 2017
    Equities
    China’s transition from export powerhouse to data dragon
    Gary Greenberg
    ‘Capital Square’ chosen as name for new 153,000 sq ft building in the heart of the Exchange district   Hermes Investment Management, the £29.8 billion manager focused on delivering superior, sustainable, risk adjusted returns to its clients – responsibly, announces that planning consent has been granted for its brand new office development and multi-storey car park in Edinburgh’s city centre.
  • February 8, 2017
    Equities
    The stocks powering India’s true emergence
    Gary Greenberg
    At Hermes we have long held the belief that the financial system should operate in the interests of its ultimate asset owners, not its various agents. We also recognise that the decisions financial practitioners make on how to invest beneficiaries’ money entrusted to them shapes the society they will live in. Further, we argue that the differentiation between ‘shareholders’ and ‘stakeholders’ which is often produced to justify the status quo is inherently false. Today, the majority of shares are owned (through savings and pensions) by the very people who make up what we think of as societal stakeholders. That the majority of these same stakeholders perceive the ‘system’ to have failed them is becoming increasingly clear around the developed world and has been noted by many, most recently here by the Prime Minister.
  • January 27, 2017
    Equities
    It’s the Year of the Rooster, but is there much to crow about?
    Gary Greenberg
    With Chinese New Year now upon us, Gary Greenberg, Head of Emerging Markets at Hermes Investment Management, gives his views on China, and what lies ahead in the Year of the Rooster. There had been hope that China would embark upon economic and legislative reforms by now, but so far the evidence is sparse. Therefore we believe that China is on an unsustainable track. Official credit growth is expected to slow down but in any case, at the current rate we believe that the credit to GDP ratio will be as high as 350% by 2020. This is less egregious than Turkey or Brazil because the majority of this debt is held domestically. State-owned enterprise finances are improving because the authorities have been cutting supplies of steel and other basic materials by telling companies to halt production, which has resulted in a spike in prices for these materials. In the short term, we believe growth will continue at 6+% despite the declining property market. This is due to continued government spending on infrastructure, despite private investment stagnating. Also, credit growth and negative real rates keep liquidity high. Normally in this environment money would leak overseas but the authorities are working hard to plug any leaks so that they can manage the eventual economic slowdown, putting it off for at least another year.
  • January 23, 2017
    Equities
    India – the last real emerging market
    Gary Greenberg
    In their latest Gemologist publication, Gary Greenberg, Head of Emerging Markets and Kunjal Gala, Senior Analyst, assess India’s ability to modernise and truly emerge. “The futuristic architecture and glass towers of Shanghai and Seoul defy old stereotypes about emerging markets. But investors heading into Mumbai from the airport, confronted with searing poverty and pollution, could be forgiven for questioning the talk of Asia’s economic miracle taking root in India. We would encourage them to take a broader view: although corruption and inequality remain endemic, there are signs of profound long-term change.”