YXI

The growing use of factor index data in the portfolio construction process and the continual increases in the size of assets tracking these indexes serve to emphasize the success of factor investing.While Quality and Momentum have done well globally, they have been especially successful in helping drive the performance of stock markets in the US and China.Factor investing has become increasingly common in China's equity markets - the world's second-largest, behind only the United States, with a total market capitalization of over USD 10 trillion.

The central banks have increased their assets by 38.5% in the last twelve months, which has had a profound effect on both the bond and equity markets globally.They have pushed down interest rates for their nations, in an attempt to control the debt of their respective governments, as all of the governments borrowed more and more money to support their economies during the pandemic.The ECB and the BOJ have pushed their yields below the once-unthinkable line of zero. The Fed may also be motivated into negative interest rates if the Democrats win the upcoming US elections.

Retail sales jumped to 3.3% YoY in September from 0.5% YoY in August. This big jump shows that consumption has further stabilised.Property investment grew 5.6% YoY YTD in September after 4.6% YoY YTD in August.Headline industrial production was 6.9% YoY in September, a moderate improvement from 5.6% YoY in the previous month.We are revising our China GDP forecast to 1.7% from 0.7% for the whole of 2020, and 5.5% YoY from 4.0% YoY for 4Q20.

Tariffs and sanctions haven't yet hampered Chinese corporate bond markets too much.Because US-China tensions may escalate in the run-up to the US elections on November 3, we think caution is warranted.Investors should also make case-by-case assessments when looking at the potential vulnerabilities of Chinese banks and SOEs, in our view.

China September Caixin Services PMI came in at 54.8 to top both the consensus mark of 54.3 and the 54.0 reading for August.Services PMI has now increased for five straight

China is a couple of months ahead of us all in the economic cycle concerning coronavirus.They closed down earlier, opened up earlier and it's a reasonable enough view that they're a guide to our own future performance.The good news being that a full recovery does seem to be possible and within a reasonable timescale too.

This article will cover four key macroeconomic themes for year-end 2020.These themes are the Treasury market, oil prices, US dollar foreign exchange rates, and China's economy.I believe these forces will determine the direction of the global stock markets.That is, higher Treasury yields, lower oil prices, stronger USD, and weakening of China's economy will push global stock indexes lower.

Timing rallies to predict short and unpredictable market behavior is mission impossible.Capturing China as an asset class is not about being opportunistic; it is not a trade.We believe that investing in China is not about if and when one should invest, but rather about managing your time horizons to allow for a strategic allocation to this asset class.