September 21, 2021—China Evergrande Group is at the center of media headlines and investor concern, stoking fear around China’s property market and coinciding with higher volatility in equity markets. Below we cover our view on the evolving issues and main questions we are hearing from clients. In short, Evergrande presents a risk to China’s property market and economic outlook, but broader systemic threat to financial markets remains a tail risk event.
September 20, 2021—German stocks have had a strong run of performance in 2021 through September 17, returning 12.3% in EUR terms and 7.7% in USD terms. More broadly, Euro Area stocks have returned 17.8% in EUR terms and 13.0% in USD terms. Consequently, our portfolio construction overweights to international developed country stocks have made a significant contribution to portfolio performance.
July 30, 2021—In recent weeks sweeping regulations from Chinese policymakers in several industries have rattled investors and sent Chinese equities reeling. The MSCI China Index has fallen 31% since its February peak and 11% between July 26–27 alone (Figure 1). China’s hefty weight in the MSCI Emerging Markets Equity Index—over 34%—makes it impossible for an investor to ignore (Figure 1).