Turning less bearish on Hong Kong
The MSCI HK index has corrected by around 11% year-to-date, significantly lagging the MSCI China index and the regional MSCI Asia ex-Japan index. While the entire region has been hurt by the COVID-19 pandemic, growing political uncertainties in Hong Kong and escalating US-China tensions have weighed greatly on HK equities.
Mexico pension overhaul plan a (relatively) positive surprise
The Mexican government's economic policy decisions this year have been going against the grain of those of its Latin American peers. While most countries have substantially eased fiscal and monetary policy to help households and businesses sustain the shock from the coronavirus, Mexico has stuck to its austere guns around fiscal easing, and the central bank has maintained interest rates at relatively high levels. Partly on the back of these actions, we expect the Mexican economy to experience a deeper and longer recession than other emerging market countries.
The moment of truth for jobs
Shortly after the COVID-19 crisis erupted in Europe, most governments reacted swiftly to the threat of sudden mass unemployment by setting up temporary job retention schemes. These have been instrumental in cushioning the impact of the recession on both companies and employees. But the crisis still seems far from over, and many sectors might need a few years to recover fully. How many furloughed workers eventually lose their jobs will be determined by government decisions, the future course of the pandemic, and the shape of the economic rebound.
Why has the UK equity market lagged other regions?
The MSCI UK has significantly underperformed other equity market regions this year. While the US and emerging markets have delivered positive total returns, the UK is the laggard at –18%. The MSCI Eurozone, meanwhile, has fared a little better, returning –10%.
Check your weights
To say that 2020 has been a difficult year is certainly an understatement. The global pandemic has unleashed unprecedented, lightning-fast, and often heart-breaking challenges and changes across multiple dimensions of our society. And this year is far from over with an upcoming presidential election that could have additional, important policy implications.