After a year of high inflation and high interest rates, the pinch has set in. This week, the US’ consumer bellwether stock Home Depot Inc reported that first-quarter sales declined 4.5% year on year and forecast that its full-year sales for 2023 would be 2% to 5% lower. The company attributed thi...

Condivergence: The nightmare of debt defaults

Bank Negara Malaysia added 0.25% to its overnight policy rate to 3% per annum last week, seeking to stem the capital outflow that is keeping the ringgit weak. On the other hand, as the market had expected, the US Federal Reserve raised interest rates by 0.25% last Wednesday to 5% to 5.25% per ann...

Condivergence: Uncertainties ahead for financial markets

The Spring Meetings of the World Bank and International Monetary Fund (IMF) in Washington this month were decidedly pessimistic on the global economy, with reports hinting that a global recession is on the cards. Even the Federal Reserve is predicting a “mild recession starting later this year” i...

Condivergence: If the world is staring at a recession, what should investors do?

The collapse of Silicon Valley Bank (SVB), followed in quick succession by the fall of Credit Suisse (CS), exposed a crisis of confidence in financial systems and regulation. First, there was a flight to quality, as deposits shifted quickly to large banks, so authorities stepped in to guarantee all depositors, rather than just insured depositors. This undermined the rules they put in after 2008 to “bail in” banks, putting shareholders at risk before any “bail out” by governments.

Condivergence: Bailing out banks by bailing in the economy

The sudden collapse of Silicon Valley Bank (SVB) has sent shock waves and ripples from the US outwards. Two other American banks have also closed, one voluntarily (Silvergate Bank) and the other (Signature Bank) was taken over by the Federal Deposit Insurance Corporation (FDIC), causing even Japanese bank shares to tumble for a few days.

Condivergence: To QE or not QE? That is the SVB crisis question!

Forecasting how the global economy and markets will perform in 2023 is getting schizophrenic, with a wide range of possibilities before us. Devising the right economic and technology strategy becomes imperative, not just for nations and businesses but also investors.

After two stellar y...

Condivergence: Taking advantage of the New Global Digital Market

As the world sees an end to cheap funding courtesy of higher US Federal Reserve interest rates, structural shifts may be coming to global finance. Bloomberg reported last week that money has been pouring into European fixed income products following steps by the European Central Bank (ECB) to lif...

Condivergence: The home bias in financial markets

To the surprise of many, China ended its draconian Covid-19 restrictions just before the Lunar New Year. Before that, outside analysts were predicting gloom and doom. Long-term holders of Chinese onshore equity had complained that the 10-year average return of Chinese stocks (according to S&P...

Condivergence: China’s market recovery must be closely watched

In 2002, a Big Mac burger could be bought in Japan for ¥262, compared with US$2.35 in the US, which suggests that one US dollar then was worth ¥111. Instead, the dollar-yen rate was significantly weaker at 130. By 2012, one would pay ¥320 for the same burger, 22% higher in nominal terms, though i...

Condivergence: Yen could be the surprise of 2023

Does the collapse of the crypto exchange FTX signal the end of speculative investing?

One of the unfortunate outcomes of the abrupt bankruptcy of FTX was that stalwart institutional investors like Temasek Holdings and the Ontario Teachers’ Pension Plan were stung in the media by its col...

Andrew Sheng

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Andrew Sheng

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