Chart of the Week and Weekly Report Highlights
This week: global equity technicals, Treasuries, Stock/Bond ratio, value vs growth, frontier markets, EM bond yields, equity sentiment, fund flows...
This post gives you a look at what was covered in the latest Weekly Insights report, including of course our famous “Chart Of The Week“ write up.
Chart of the Week - Global Equity (Population) Growth
Population Growth Trends: Demographics has been a hot topic lately, with apparently opposing forces arguing on the one hand for higher population growth to avoid population collapse, and yet others basically arguing for depopulation to avoid climate catastrophe in the quest for sustainability.
We try to steer clear of ideological debates and focus on the facts here — especially as they pertain to investment conclusions: which is our main job. The below chart is an exercise in gauging the facts in terms of population growth across the major groups of countries within global equities.
What is stark and interesting is both the trend vs level aspect as well as the apparent divergence vs convergence across these disparate groups.
Old developed economies (think Europe, Japan) are down the bottom of the growth rankings, meanwhile the US has converged towards them after outpacing for some time. Even the previously fast growing Emerging Markets have trended down toward that bunch. There is a theme there (slower population growth overall).
But perhaps what stands out the most is frontier markets: higher than the rest, and expected to remain high. Frontier has the demographic advantage, and this matters because economic growth potential (and ultimately earnings growth potential) depends on a combination of population growth and productivity growth.
So a very intriguing chart indeed, in general, but especially for global equities and asset allocation strategy. The global equity bear market of 2022 is sure to bring opportunities as valuations reset lower, and it’s information like this which will help prioritize where to look for long-term investors.
Key point: Population growth is slowing around the world (except frontier markets).
Chart methodology notes: the country groupings are as per the MSCI country classifications, the data come from the IMF (including projections) and World Bank (who each aggregate data from other sources). The growth rates are based on total population within each of the groups of countries.
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Topics covered in the latest Weekly Insights Report
Aside from the chart above (which was featured as part of an update to our views on Frontier Market Equities), we looked at several other charts and important macro/asset allocation issues in this week’s report:
Global Equity Technicals: weighing short-term improvement vs the cycle.
Treasuries: tactical + strategic models for the bond yield outlook.
Stock/Bond Ratio: the answer is the question: i.e. recession yes or no?
Value vs Growth: still (relative)value in value, but technicals challenging.
Frontier Markets: looking at valuations, technicals, FX, expected returns.
EM Government Bonds: latest moves in EM Sovereign bond yields.
Equity Sentiment: a lot of minds that could be changed...
US Fund Flows: fund flows ticking up after previous weakness.
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Sincerely,
Callum Thomas
Head of Research and Founder at Topdown Charts
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