Money Matters November 26th

26 November, 2014
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Asia Pacific

The MSCI Pacific Index rose 1.8% in the week to 14 November.

Japan’s TOPIX was the region’s best performer, up 2.7%. Sentiment was boosted by growing speculation that prime minister Shinzo Abe may call a snap election for next month and postpone a second increase to Japan’s consumption tax, scheduled to rise from the current 8% to 10% in October 2015.

Consumption has slowed following the first consumption tax rise in April this year, raising concerns over whether the Bank of Japan’s 2% inflation target—a key component of Abe’s goal to reinvigorate the economy—can be met next year. The release of Japan’s third-quarter GDP data on 17 November is seen as critical to the government’s decision on whether to raise the consumption tax as scheduled.

Hong Kong’s Hang Seng rose 2.3%, ahead of the opening of the city’s stock-trading link with Shanghai. The trading link, which begins on 17 November, will give foreign investors significant access to China’s equity market. Technology stocks led the index higher, after US President Barack Obama and Chinese President Xi Jinping agreed that the US and China will drop tariffs on a range of technology products.

Australia’s resource-heavy All Ordinaries slipped 1.6%, as a sustained fall in the price of iron ore continued to weigh on mining stocks, while Singapore’s Straits Times returned 0.9%. 

United States 

Wall Street closed modestly higher in the week ending 14 November. The S&P 500 rose 0.4% to end the week at another record high, while the Dow Jones was up 0.3%. The Nasdaq outperformed, gaining 1.2%, as blue-chip technology stocks remained in demand on the back of optimism over their profits outlook.

In general, trading was relatively quiet with little significant newsflow. Investors continue to fret about the monetary policy outlook—the debate over when the Federal Reserve (the Fed) will raise US interest rates continues to rage—and the potential for further political gridlock in Washington following the mid-term election results. However, significant news on both fronts is unlikely before next month.

In the meantime, investors digested the latest economic data releases, which last week were dominated by monthly reports on retail sales and consumer sentiment. US retail sales were particularly strong, rising 0.3% in October and bouncing back from an unexpected dip in September. Excluding cars, fuel and building materials, sales were up 0.5% on the month.

The outlook for consumer demand has also brightened considerably, according to the University of Michigan’s consumer sentiment index, which rose in November to its highest level since July 2007. As consumer spending makes up such a significant proportion of US economic output, signs of strength in retail sales and consumer sentiment are positive for US growth into the end of 2014 and beyond.

Inflation and wage expectations, however, remain muted. The University of Michigan survey suggested that households remain pessimistic about wage increases and that standards of living are expected to continue to fall, with expectations for income gains below inflation forecasts. Meanwhile, the survey’s expectation for inflation in a year’s time fell from 2.9% to 2.6%, while the five-year inflation forecast was also at 2.6%—the second lowest reading ever.

All this suggests that wage increases are set to remain muted and that price increases are not expected to jump in the near future—a scenario that is unlikely to move the Fed into taking a more aggressive policy stance, despite the economy’s gathering momentum. As a result, the market consensus continues to expect the Fed to start raising US interest rates gradually by the middle of 2015.

Europe 

European equities made gains in the week ending 14 November, with the MSCI Europe Index rising 0.6%. The UK’s FTSE 100 was among the top performing regional markets, up 1.3%, while the Swiss SPI returned 1.0%, and Sweden’s OMX Stockholm 30 and the French CAC 40 both finished 0.3% higher. Italy and Germany lagged, with the FTSE MIB declining 0.7% and the DAX falling 0.4%.

Sentiment in the week was supported by news that eurozone GDP had grown by 0.2% in the third quarter of 2014, compared with the previous quarter’s 0.1%. This was despite recent disappointing industrial production data.

Cyprus and Italy were the only member states that saw their economies contract over the quarter, while Greece registered relatively robust growth of 0.7% in the three months. The performance of the region’s core economies was less remarkable, with German GDP growing by 0.1% in the quarter and France registering growth of 0.3%.

Meanwhile, further signs of strength in the UK economy, which grew by 0.7% in the third quarter, were reflected in the latest domestic unemployment and wage growth figures. Year-on-year wage growth was ahead of expectations in September, and for the first time in five years, was higher than the rate of consumer price inflation (CPI)—which means that the average employee is better off in real (inflation-adjusted) terms. While the total number of unemployed in the UK fell in the three months to the end of September, the unemployment rate remained unchanged at 6.0%.

The Bank of England (BoE’s) Monetary Policy Committee (MPC) released its Quarterly Inflation Report for November, which was viewed as “dovish” in tone. A dovish—as opposed to hawkish—stance is more closely aligned with the maintenance of low interest rates.

The MPC revised downwards its expectations for inflation, anticipating that CPI will drop to 1%, and hover around that rate, in 2015. BoE governor Mark Carney cited the stronger pound, commodity price declines, potential stagnation in the eurozone and UK economic slack, or unused capacity, as reasons for the dampened inflation expectations.

This latest statement serves to entrench expectations that the BoE will not raise interest rates until the second half of 2015—our view is that rates could still rise earlier in the UK than in the US.

On the corporate earnings front, European companies delivered strong earnings growth in the third quarter. Excluding financials, European corporate earnings were up 16%, compared with around 7% in the US, while European equities are far more attractively valued.
 

Global Emerging Markets

The MSCI Emerging Markets was up 0.6% in the week to 14 November.

The MSCI China rose 2.0%, as sentiment was boosted by confirmation of the start date of a scheme linking the Hong Kong and Shanghai stock markets. Brokerages led gains on hopes that the stock-trading link will draw in more investors and lead to an increase in their revenues. China’s industrial output unexpectedly dropped in October, while a slide in the country’s housing sales moderated.

Elsewhere in emerging Asia, India’s Sensex rose 0.6%, as easing inflation strengthened hopes of a rate cut. Wholesale price index inflation rose at an annual rate of 1.8% in October, its slowest rate since September 2009. Taiwan’s Taiex returned 0.8%. Taiwan will hold local government elections later this month, which are likely to give indications of a policy reform agenda for next year.

Returns across Latin America were negative. Brazil’s Bovespa fell 2.7%, due to weakness in mining stocks, as prices for iron ore continued to slide on concerns about oversupply in the global market. Petrobras shares tumbled after the state-run energy company delayed its third-quarter results due to a deepening corruption scandal.

In Mexico, the IPC was down 2.8%, as mounting concerns over rising social tension in the country weighed on sentiment. The alleged abduction and massacre of students by municipal police in September has led to weeks of protests, with concerns raised that the ongoing unrest could lead to lower confidence from national and foreign investors, hampering investment flows into Mexico. Argentina’s Merval was down 7.9%.

Russia’s RTS slipped 0.7% in the week. On Monday, the Russian central bank announced that it had abandoned the rouble’s trading corridor, allowing the currency to trade freely as of next year. The International Monetary Fund welcomed the move, stating that it should help the central bank control inflation, but warned that it would not be enough to cushion the economy from the impact of falling oil prices. Russia’s third-quarter GDP growth rose a better-than-expected 0.7% year on year, helped by an improved harvest.

Bonds & Currency 

The performance of developed government bond markets was mixed this week, with 10-year yields around 3 basis points (bps) higher in the US, while euro and UK yields were down 3 bps and 9 bps, respectively.

In the UK, the more dovish-than-expected November Inflation Report by the Bank of England supported bond markets. Investors clearly see the dovishness as a response to recent data developments in core inflation and a recognition of downside risks to euro area growth.

*Source: J.P. Morgan Asset Management 

Thank you for supporting the 4th Annual Chi Fan for Charity organized by Austen Morris Associates 

 

Thank you to all of the guests and supporters for  the 4th Annual Chi Fan for Charity Shanghai held on November 15th. With over 600 guests joining us to dine out and celebrate at the Lapis Thai After Party, forty five restaurants donating meals and over 100 sponsors donating their talents, products and services, we raised over 350,000 RMB for our beneficiaries. We enjoyed working with everyone and are so thankful for the generous donations from Shanghai’s top restaurants including Andaz, Bang! By Mr. Willis, Beef & Liberty, Bocado, BOCCA, Café Sambal, CHAR at Hotel Indigo, Da Marco, DOC, el Efante, el Willy, Gallo, Hai by Goga, Haiku, Henkes, Kakadu, La Poste, Lapis Thai/Le Viet, Light & Salt, Lotus Land, M1NT, MADISON, MAYA, Maya Milano, Mayita, Mr Willis, Napa Wine Bar and Kitchen, 8 1/2 Otto e Mezzo da Bombana, Pistacchio, Pistolera, Pizza Express, Prego at The Westin, Sale e Pepe, Scarpetta, Shanghai Slims, Si Ji Xuan at Four Seasons Hotel, Table No. 1, Tap House, The 1515 West Chophouse & Bar, The Commune Social, The Grumpy Pig, The MEAT at Kerry Hotel Pudong, Thought for Food, Urban Thai, Vedas and Wujie. Your ongoing support made Chi Fan for Charity a huge success.  

Thank you to all of our hosts including Aaron Wild & Nicola Hamilton, Abby McBride, Aline Siobhan Davies, Antony Ward, Benjamin Knopp, Benoit Thebaut & Stephane Demontgros, Calvin Tsao, Emily Beavers, Frej Lewenhaupt Sandberg, Geoff Siebengartner, Greg Morris & James Colclough, Ian Sullivan, James Broomer, James O’loughlin, Jen Flowers, Jen Loong, Jenny Witiker, Joanna & Michael Crain, John Cox, Jon Holand, Julie Jackson, Kevin Mann, Kit Mention, Lana and John Jakovich, Larry Denecker, Lenel & Jean Roux, Lisa & Brian Cupps, Lynette MacDonald, Margaret Keefe, Maridyth Smith, Matt Kuykendall, Matthew Riddington, Melissa & Adam Juszynski, Michael Knuppel, Michael Zhou, Michelle Teope Shen, Ned Kelly, Petrea Harvey, Sarah Stevens, Wei Vivien Chen, Wendy Paris and Yuhua Chen.

A special thank you to our After Party sponsors including drink sponsors Coca Cola, The Wine Republic, FIJI, Primet, Hi Degree Tequila, Dulce Vida Tequila, Sarklass, Cassia Brands, Gotham East, and 31 Jiu. Our entertainment sponsors included Sharingbox, Brawl on the Bund, Klip Tap, Verve Talent & Modeling, Alan McLavor, The Groove, and URVC.  Thank you to Digital Creative, Yoopay, Uber and Botánica Floral Design and Events. Thank you to our food sponsors including CinnaSwirl, Miss Ma, Strictly Cookies, Spread the Bagel and Fillidutt.

A special thank you to our Silent Auction sponsors including Andes Premium Catch – Little Catch, Angelika Lincoln, BeCycle, Belleisbelle, Botánica Floral Design and Events, Brawl on the Bund, Bukhara Indian Grill and Lounge, Cages, Casa Pagoda, Club Meiwei, Cukimber, Deans Bottle Shop, Dragon Events, Eat Well Shanghai, Educating Girls from Rural China, Farmhouse Juice Vouchers, Fillidutt, Golden Gloves Boxing Gym, Hazel & Marie Pearls, Heart to Heart Shanghai, Hunter and Gatherer, Hyatt on the Bund, IMG, IPAI, Karma Yoga, Mary + Marie, Mary H Designs, Mercedes-Benz Arena, NFL, Oba Coats, Shanghai Centre, Pret a Manger, The Rooster, Serenity Seitan, Shanghai Supper Club, Shanghai United Family Hospital, SHOKAY, Side Chef, Sip and Paint, Spinback Fitness, Spread the Bagel, Sugar Lady, The Collection, The Langham Xintiandi, The Puli, The Rooster, TSA – Tian Shi Art, Two Cities, Uber, UnTour, Via Pacifica Selections and ZnB Fitness.

Thank you to our fantastic Media Sponsors including Shanghai WOW, Touch Media, That’s Shanghai, City Weekend, Community Center Shanghai, HiShanghai, Klip Tap, Olifun, Redscale Studios, Riviera Events, Shanghai Daily Secret, Shanghai Expatriate Association, Shanghai Family, Sherpas, Talk Shanghai, Timeout Shanghai and WeHelper for helping to spread the word.

A final thank you to the organizing sponsor Austen Morris Associates for your leadership over the last four years and ensuring that the event is better and better each year. Also, thank you to the organizing sponsors edible marketing, Dragon Events, The Good Agency and Spectrum.

“What a fantastic evening all-round! The food and wine were outstanding in their own right. When you add in the company of old friends and new acquaintances, it was a truly memorable evening. The after-party was a great success and everyone thoroughly enjoyed it. Most importantly, however, everyone contributed to a worthy cause and helped to raise money for this year’s charities.” – Jon Holand, Austen Morris Associates

“From Prego on the Bund, to the Lapis Thai, host Matthew and Sara Riddington and guests Stephen, Ani, Alex, Abby, Tim and Martha enjoyed a wonderful evening despite the later onslaught of Tequila shots! Thank You Chi Fan.” -Matthew Riddington, Austen Morris Associates

“Chi Fan for Charity guests really enjoyed the charismatic & hilarious V-men, while taking pictures with them and the frame. Looking forward to having further cooperation in the near future! We can always help you providing any kind of Performers/Talent & Event Management services in China & Asia.”- Nadia Villaverde, Verve International

“Thanks, great event!” – Adam Juszynski, Coca Cola

“Thanks for the email and for a wonderful night.” – Petrea Harvey, Yew Chung International School

“I´m quite interested to cover your visit at the hospital with the Heart to Heart children surgeries and as well the girls at Educating Women of Rural China in Qinghai. Please feel free to contact me whenever you need PR/Marketing photos or video, I would be very happy to document this kind of charity.” -Michelle Mueller, Volunteer Photographer

“You’re amazing–great job! Great party. MUCH better than last year’s after party!  This venue was perfect, as was the execution.  Great job. We had an excellent time! Please keep us in mind for next year.  Music choices were betters as well!” – Matt Kuykendall, Shanghai American School

“The event and party were fantastic!  You did an amazing job!!  There is no way to tell you how happy we are that you included Heart to Heart Shanghai as one of the beneficiaries…. so all I’ll say for the children and families that you will impact so much is THANK YOU!  You’re the best.” – Karen Carrington, Heart to Heart Shanghai

“Thank you for the follow up and congratulations for a real great event. It was my first one and we had a fab time!” – Angelika Lincoln, Angelika Lincoln Photography

“It was a sincere pleasure meeting you as well, and congrats on the events turnout & success!  I certainly had a great time!!” – Jonathan Hasson, Luxury Concierge China

“It was a pleasure to be part of the Chi Fan for Charity Dinner, seeing all the guests come together for a good cause and having the honour to do my party for charity makes all my hard work in Shanghai extremely worthwhile. I am now motivated to pour my heart into many more upcoming charitable projects on behalf of Bocca!” – Chef Daniele Palazzoni, Bocca

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Contact marketing@austenmorris.com for more details.

Austen Morris Associates Participates In Community Center Shanghai’s Annual Giving Tree

For our third year, Austen Morris Associates participated in Community Center Shanghai’s (CCS) Annual Giving Tree project. On November 20th at PD 003 Benefit People Primary 利民小学 Migrant School in Pudong. Managing Senior Partner James Colclough, Special Projects Manager, Billie Jin, Marketing Team including Connie Li and Katie Littlefield brought fifty bags filled with a warm jacket, new shoes and a toy to each of the needy students. Along with other donors and CCS, we hope to inspire the migrant community and their children in need to show generosity to others.

Since 2003, Giving Tree has supported over 80,000 students. This year, they hope to support over 12,000 children and their teachers with donated bags. The ceremony put on by the children included a beautiful performance which showed their appreciation for the generous donors which included the American Club Shanghai (ACS), Guoxin, Cargill, Parker Hannifin, & HB Fuller and Austen Morris Associates.

A huge thank you to Founding Senior Partner Greg Morris and Managing Senior Partner James Colclough for donating twenty-five bags to ensure that all of the children in the class have a special gift! Thank you to the other staff and consultants for donating bags including Kelly Olver, Darryl Viojan, Will Coppin & Angie Swann, Maggie Zhu, Joy Zhang, Jackie, Bessie Jia, Connie Li, Sherry Zhang, Matthew Riddington, Nina Bao, Jayous Mata, Katie Littlefield, Marta Alonso-Goya, Fiona Deng and Jon Holand. Also thanks for Vivian and Annie Ayi helping to organize the bags! We really appreciate your support and read more here!

AMA Supports The Parkinson’s Association of South Africa

Thank you to all of the golfers who joined Austen Morris Associates at the Silver Lakes Country Club in Pretoria, South Africa for the Parkinson’s Association of South Africa (PASA) Golf Challenge.

As 2% of South Africa’s population contracts Parkinson’s the PASA committee undertook to ensure that PASA never again becomes dependent on donations for at least 70% of its budget. They aim to fundraise 10 Million Rand over the next three years and to invest these monies so that the interest earned can provide for the bigger part of its activities.

This Sponsored day at Silver Lakes is the first of a number of other golf days that we be staged in all provinces as our 40 care taking groups are well spread throughout the RSA and this ‘rescue effort’ will be everyone’s affair. These days support the oragnasation to be a 70% financially self funded organisation and forever not reliant again on governmental funding. They will provide feedback on how and on what these donations were spent/invested. Our community’s sustainability is, for the future ahead, dependent on the extent with which we can mobilize ourselves to shape the environment we live in.

Silver Lakes Golf Club is one of South Africa’s best courses with its premium facilities for members and visitors and is located in the largest golf estate in South Africa. Participants of the tournament included Senior Partner Wade Dawson and Consultant Chris Slater-Jones who both played on a four ball on a team. AMA Team members including Sheena Van Rooijen and Warren Lewis manned the 8th hole sponsored by Austen Morris Associates. Our Champagne raffle was won by Adrian Booyen, another community minded golfer.

It was a lovely day for a great cause and the players seemed to have a great time. The Golf was a shotgun start so they players all came through very quickly to keep up the pace!

A wonderful day was had by all and see more photos here.

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