EM Markets - Would you like that Super-sized? Last month, on 6 February, I shared a segment entitled “OMIG Investing in a Hard Power World”, where we expect the outperformance of Emerging Markets versus Developed Markets over the last year to continue.
For the recording of this interactive session, you can click on the link below;
Following this, the Old Mutual Investment Group (OMIG) now asks whether global inveors are missing a bigger opportunity by choosing between including developed and emerging markets in global portfolios.
In his latest piece attached, “Would you like that super-sized?”, OMIG’s Reza Fakie unpacks why the emerging versus developed markets debate isn’t an either/or decision. Instead, combining developed and emerging market exposure can unlock a far broader opportunity set – and potentially “super-sized” alpha outperformance to regular markets.
From overlooked stocks in a 2,500-strong universe to real examples of lesser-known companies driving meaningful returns, the article shows how looking beyond the obvious can create a more resilient and rewarding portfolio.
It’s a powerful illustration of how we Champion the Unseen – finding value where others aren’t looking.
SA Inflation Drifts even Lower, as SA expects a Fuel Price shocker next month. In all the news flow around the war in Iran, it was easy to miss this week’s lower SA latest inflation coming in at 3,0% year-on-year for the end of February; |
Stats SA’s chief director of price statistics, Patrick Kelly, explains why delayed medical aid increases contributed to this, in his 5-minute soundbite that you can listen to by clicking on this link;
Looking at the outliers in foods and beverages (that is, only 18% of the total inflation data);
On a lighter note, for myself, I thought my wife had been buying more cabbage, fruit and pumpkin to keep our diet healthier. I may now have a better understanding of what has really been driving our family’s buying patterns over the past month or so.
More seriously, and as a result of the war in Iran, if international oil prices and the current exchange rates remain at today's levels, we are likely to see a substantial petrol price increase of around R4 per litre early next month. In passing, during client consultations this week, I mentioned that I believe many people aren’t yet aware of this.
The opinion of leading economists, though, is that while the war is expected not to be too long, the higher fuel prices therefore won’t be long-lived. They believe that, in the short term, these higher expected fuel prices next month will not impact inflation much, as consumers will simply spend less on other goods and services to afford the fuel they need.
On a personal note, I can see fuel prices will be much higher next month. Since last week, I have asked my family to fill our petrol tanks and to keep them full between now and next month to give some short-term relief. I encourage you to take similar steps.
All things considered, further data shows that the SA consumer is stronger than before, in spending more.
US 10-year Bond yield still shows Longer Term Inflation Benign on Iran War
Higher international oil prices, if sustained, will always be bad for inflation. Longer-term bond yields, which are indicative of inflation expectations, the latest US 10-year bond yields are now at the same level as they were back on 4 February this year, well before the war broke out on 28 February.
(Lower bond yields are indicative of lower forward expectations, while higher bond yields are representative of higher inflation expectations.
Looking at the latest one-year graph, the lowest level over the last year was recorded on 27 February, the day before the war broke out, when the US 10-year bond yield was standing at 3,95% per annum.
Therefore, while these yields in the very short-term have increased over the last three weeks, as shown in the graph below, these yields are still well down over the last year.
At this stage, the fairly benign US 10-year bond yield is showing that the war in Iran is expected to be of limited duration.
FRIDAY FINISH LINE
