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  • China matters | Thinking Aloud
    to financial reform The renminbi s value isn t entirely determined by market forces and this has been a major obstacle in the way of China s goal to have a genuinely global currency Policymakers on August 11 changed the way in which the renminbi s value is established The currency is allowed to trade freely and at the end of each trading day China s central bank sets a so called reference rate that does a better job of reflecting the market than the previous system The key thing to appreciate is that the renminbi should be more volatile The days when the currency was considered a one way bet are over On a final note the issue of how accurate output figures are has been a long standing gripe Chinese data can be opaque because of a perceived lack of openness on the part of Chinese officials especially when it pertains to bad news In reality though most analysts devise their own gauges to measure economic growth So we believe the economy is not crashing and the Chinese are not devaluing Is this a call to go piling back into Chinese equities in particular and risk assets in general Well no In our view stocks are still overpriced and poor corporate governance demands caution What about other risk assets It depends on your risk appetite and whether you re committed to this market for the long term The most important thing is to try to make as informed a decision as you possibly can China matters and your view of China matters too Important Information Foreign securities are more volatile harder to price and less liquid than U S securities They are subject to different accounting and regulatory standards and political and economic risks These risks may be enhanced in emerging market countries Concentrating investments in China subjects an investment to more volatility and greater risk of loss than geographically diverse investments Ref 24533 061015 4 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture china matters Select Article URL Close Asia ex Japan Asia inc Japan Currencies Developing Economics Equities Global Related Articles Japan why faltering reforms shouldn t hide corporate achievements Asian property seeking excitement without danger Paradox for emerging market positivity Fighting off China s cold Creating value through effective stewardship Asia ex Japan Asia inc Japan Currencies Developing Economics Equities Global Related Links Learn more about Aberdeen Contact Us This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/china-matters (2016-04-26)
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  • The Complications of Raising U.S. Interest Rates | Aberdeen | Thinking Aloud
    of Fed decision makers still expecting U S interest rates to rise this year we continue to anticipate a first increase for December But the uncertainties surrounding the timing of this rate move have increased Ahead of September s meeting traders in the federal funds futures market effectively rated the chances of a rate rise by December as 64 after the meeting this probability had fallen to around 50 For the Fed to be willing to do in December what it won t do now three things need to happen First the labor market must strengthen further to provide policy makers with additional confidence that medium term wage and price pressures are building Second even if market volatility remains higher than during recent years history suggests that the Fed will only raise rates if markets retain reasonable poise and negative feedback from recent market turbulence in the U S domestic economy is limited Finally Ms Yellen particularly flagged the risk of an abrupt slowdown in China as a concern suggesting that the Fed will need greater confidence that any slowdown is of the soft rather than hard variety These hurdles seem to be giving investors a lot to think about While the first may be reasonably straightforward to judge based on domestic U S data published with relatively high frequency this is not the case for the remaining two Low market volatility in recent years has partly been the product of central banks low for long promise on interest rates but the efficacy of that promise seems to be fading Following the Fed s meeting this month equity markets fell earlier in the month both the European Central Bank and Bank of Japan failed to impress despite delivering dovish messages It seems that central banks no longer enjoy the power to reassure that they once held Furthermore if U S policy makers were to want firm proof of a Chinese soft landing this could take a number of quarters at least rather than months Ms Yellen downplayed the extent of the Fed s China data dependency stating I do not want to overplay the implications of these recent developments which have not fundamentally altered our outlook At the same time she is giving a greater weight to the global backdrop which definitely adds to the complexity of the U S rate decision It all seems a very long way from the simple certainties of the era of forward guidance based on one domestic variable the U S unemployment rate No wonder markets and economists seem a little confused Ref 24533 230915 2 Social media Download share or print this page Copy link Email link Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture u s interest rates its complicated Select Article URL Close Central banking Economics Equities Global Monetary policy North America Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the

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  • Financial services place too much faith in flawed risk models| Thinking aloud US | Thinking Aloud
    qualitative approach to analyzing risk allows for consideration of these uncertainties Statistically insignificant events with the potential to cause massive disruption are given appropriate attention Flaws in data and risks that cannot readily be quantified may cause models to produce garbage but in a holistic approach these flaws will not prove so fatal Qualitative data may not produce concrete statistics but they do allow us to look past the fallibility of models The sophisticated models used by credit rating agencies judged many complicated asset backed securities as relatively benign before the financial crisis The models were wrong Maybe if the credit rating agencies had taken a broader look at these products or just asked themselves if they understood them they might have come to very different conclusions Models based on flawed data which do not consider uncertainty are clearly insufficient A more holistic approach is needed Unfortunately such a view is not shared by many risk analysts Their only philosophy is the leap of faith that is required to account for the assumptions inherent in models Important Information This article was originally published in FTFM on September 21 2015 Ref 24533 220915 2 Social media Download share or print this page Copy link Email link Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture financial services place too much faith in flawed Select Article URL Close Communication Corporate Culture Global Multi Asset Related Articles Paradox for emerging market positivity Creating value through effective stewardship Words are wind in bond markets On Europe s home ground The sun a stick and a well for a scientific breakthrough Communication Corporate Culture Global Multi Asset Related Links Learn more about Aberdeen Contact Us This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose Some of the information may contain projections or other forward looking

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  • Some perspective on China | Thinking Aloud
    is around 5 And the slump in commodities and energy prices in the past year should provide China with an enormous economic stimulus at the time it is needed most given it is the world s largest importer of both The real issue behind international concern about China is one of transparency Investors are worried in part because it is difficult to know what s actually going on The official growth rate figures and government forecasts are viewed with skepticism It is even more difficult to work out how much leverage is in the Chinese economy although we know it is substantial and what the genuine exposure of its banks is to non performing loans Whatever the truth transparency is always better than uncertainty in investors minds As our equity team lists in its Golden Rules handbook for investing you need to understand what you re buying and until we re comfortable of that we ll be very wary of investing in China Ref 24533 230915 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture some perspective on china Select Article URL Close Developing Emerging Markets Equities Global Related Articles EM corporate bonds what happened to the apocalypse Asian property seeking excitement without danger Paradox for emerging market positivity Creating value through effective stewardship Words are wind in bond markets Developing Emerging Markets Equities Global Related Links Learn more about Aberdeen Contact Us This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose Some of the information may contain projections or other forward looking statements regarding future events or future financial performance of countries markets or companies These statements are only predictions opinions or estimates made on a general basis and actual events or results

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/some-perspective-on-china (2016-04-26)
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  • Better the devil the Fed knows | Thinking Aloud
    is to provide space to cut them again if another financial crisis develops Wobbles in economies around the world in recent weeks and months only go to show how rickety the global recovery is after all But it is not clear that hiking then cutting provides more stimulus than keeping rates low So all things considered there is little need to clip the wings of inflation which is not exactly taking flight It seems the Fed may have decided to settle with the devil they know Ref 23211 220915 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture better the devil the fed knows Select Article URL Close Central banking Currencies Economics Fixed Income Global Interest rates Monetary policy Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Central banking Currencies Economics Fixed Income Global Interest rates Monetary policy Related Links Learn more about Aberdeen Contact Us This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose Some of the information may contain projections or other forward looking statements regarding future events or future financial performance of countries markets or companies These statements are only predictions opinions or estimates made on a general basis and actual events or results may differ materially This information does not provide financial or investment advice and does not take into account the particular financial circumstances of individual investors Before investing investors should seek their own professional advice Neither Aberdeen nor any of its employees associated group companies or agents has given any consideration to nor have they or any

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/better-the-devil-the-fed-knows (2016-04-26)
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  • Quantitative easing’s “evil twin” | Thinking Aloud
    to tighten monetary policy For a start both the Bank of Japan and the European Central Bank continue to make considerable asset purchases and may yet do more putting downward pressure on yields In addition EM central bank selling of U S Treasuries and other government debt may be offset by private sector buying as investors seek a safe haven amid higher volatility It s certainly telling that despite EM foreign exchange reserves declining significantly over the past year 10 year bond yields in the major developed markets have fallen by between 20 and 60 basis points bps in the same period We don t doubt that QT is likely to present yet another headwind for developed market central banks keen to begin the process of raising interest rates to more normal levels But without convincing evidence that the selling pressure on bonds from EM foreign exchange decumulation outweighs purchases by central banks and the private sector we have a hard time believing that QT will lead to a significant tightening in monetary conditions in the likes of the U S and the U K Add in our broadly constructive views on U S and U K domestic recoveries and we continue to think that hikes in official interest rates are on their way Important Information Fixed income securities are subject to certain risks including but not limited to interest rate changes in interest rates may cause a decline in the market value of an investment credit changes in the financial condition of the issuer borrower counterparty or underlying collateral prepayment debt issuers may repay or refinance their loans or obligations earlier than anticipated and extension principal repayments may not occur as quickly as anticipated causing the expected maturity of a security to increase Foreign securities are more volatile harder to price and less liquid than U S securities They are subject to different accounting and regulatory standards and political and economic risks These risks are enhanced in emerging markets countries Ref 23211 170915 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture quantitative easings evil twin Select Article URL Close Bonds Central banking Currencies Fixed Income Interest rates Monetary policy Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity ECB action kitchen sink or leaky tap for hedge funds Central banks and broken promises Bonds Central banking Currencies Fixed Income Interest rates Monetary policy Related Links Learn more about Aberdeen Contact Us Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION

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  • Today’s cost of living | Thinking Aloud
    seems like something of an anomaly and the country s new found wealth will certainly have passed by the majority of Luanda s population who still reside in poverty The most expensive city It s not London but Luanda the capital of Angola But what of the country whose currency others are most commonly judged against While the U S is not a contender for the most expensive place to live and work the rise in the dollar contributed to sweeping rises in the cost of living in many of its cities from Los Angeles to Chicago and from Seattle to Honolulu With the world s investors keeping a keen eye on the path of U S rates perhaps U S Federal Reserve Fed Chair Janet Yellen holds a key to the appeal of her nation s cities to overseas businesses in the coming year As we can see this interesting but sometimes overlooked survey provides some real insight into how changes in monetary and fiscal policy around the globe affect the real actions and reactions of the business world Ref 23211 140915 1 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture todays cost of living Select Article URL Close Currencies Demographics Economics Global Related Articles Japan why faltering reforms shouldn t hide corporate achievements Paradox for emerging market positivity Fighting off China s cold Creating value through effective stewardship Central banks and broken promises Currencies Demographics Economics Global Related Links Learn more about Aberdeen Contact Us Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE RESULTS The views and opinions expressed are provided for general information only and do not constitute specific tax legal or investment advice to or recommendations for any person We suggest that you consult your financial or tax advisor accountant or attorney with regard to your specific situation The details contained here are for information purposes only and should not be considered as an offer or solicitation to deal in any of the investments mentioned herein Aberdeen Asset Management AAM does not warrant the accuracy adequacy or completeness of the information contained herein and expressly disclaims liability for errors or omissions in such information and materials Any research or analysis used in the preparation of the information has been procured by Aberdeen for its own use and may have been acted on for its own purpose Some of the information may contain projections or other forward looking statements regarding future events or future financial performance of countries markets or companies These statements are only predictions opinions or estimates made on

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/todays-cost-of-living (2016-04-26)
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  • The pitfalls of “one size fits all” monetary policy | Thinking Aloud
    a zero sum game that can modify relative conditions but is unlikely to benefit world growth Inter regional transfers resulting from currency moves run the risk of resulting in central bank chain reactions as they seek to protect themselves from unduly strong currencies by following each other s policy changes Inter temporal Asset appreciation is a net creation of value except it s not if it is owed to an increase in valuation multiples that do nothing but bring forward to the present returns that were due for the future In fact a mere understanding of this fact may well offset the purported wealth effect benefits that asset appreciation is meant to generate The multiples appreciation is doomed to subside and may even reverse as we are currently seeing with inflated equities vulnerable to a turn in sentiment Monetary policy has transformative virtues impacting the returns accruing to different parts of the economy Applied in the right context it may well stimulate growth by helping demand to recover when it is artificially depressed But interest rates are not a surgeon s instrument They are indiscriminate weapons with an economic impact greatly lacking in precision and where the wealth gained by some is often paid for by others Interest rates are not a surgeon s instrument The timing of rate rises in the U S and the U K is uncertain because like the Little Prince s king being asked to order a sunset they cannot engineer an economic outcome but must wait till the conditions are favorable As investors it pays to focus more on the economic conditions and less on the presumed omnipotence of any given central bank Important Information Foreign securities are more volatile harder to price and less liquid than U S securities They are subject to different accounting and regulatory standards and political and economic risks These risks are enhanced in emerging markets countries Ref 24533 090915 2 Social media Download share or print this page Copy link Email link Print this page Share on twitter Share on LinkedIn Share on Google Share on Facebook Copy URL http www aberdeen asset ca en thinkingaloudus the bigger picture the pitfalls of one size fits all monetary policy Select Article URL Close Bonds Central banking Economics Fixed Income Interest rates Monetary policy Related Articles Japan why faltering reforms shouldn t hide corporate achievements Like the US the UK needs infrastructure capital Paradox for emerging market positivity Fighting off China s cold ECB action kitchen sink or leaky tap for hedge funds Bonds Central banking Economics Fixed Income Interest rates Monetary policy Related Links Learn more about Aberdeen Contact Us This Content Component encountered an error Send us feedback First Name Last Name Email Address Comments Thinking aloud Internal Links About Thinking aloud Privacy and Cookies Policy Accessibility Help Keep in touch twitter LinkedIn google facebook More about Aberdeen Asset About Aberdeen Asset Management Aberdeen Asset Management Copyright 2015 IMPORTANT INFORMATION PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE

    Original URL path: http://www.aberdeen-asset.ca/en/thinkingaloudus/the-bigger-picture/the-pitfalls-of-one-size-fits-all-monetary-policy (2016-04-26)
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