The “Three Amigos Summit” on Nov. 18 in Washington D.C. appeared to reinforce President Joe Biden’s shift towards Trumpian protectionism. Biden refused to budge from his position of using tax credits to support domestic production of electrical vehicles, potentially damaging over 50 years of voluntary cooperation and trade integration between U.S. and Canadian firms in the automotive sector. On Nov. 24, the U.S. Department of Commerce stated it will impose duties of 17.9% on imported softwood lumber from Canada, which is twice the previous rate of 8.99%. This shift towards protectionism should be of grave concern for investors as less-open

Supply chains for technology, and those passing through China in particular, were a constant source of political tension during Donald Trump’s presidency. The election of Joe Biden is unlikely to produce an abrupt change in US policy towards China, although we may see some tinkering around the edges. The topic reared its head again this year following bottlenecks in semiconductor supply chains. This research note examines the importance of these technological supply chains in Asia, and their interaction with President Xi’s Made In China 2025 (MIC 2025) policy initiative. Despite the hype surrounding MIC 2025, efforts to move up the

Over the years, Fathom Consulting has created a wealth of proprietary indicators, some of which are available on Refinitiv’s Chartbook, including the one shown here. This examines China’s progress in transforming its enormous manufacturing base into the high-tech powerhouse envisaged by the Made in China 2025 (MIC 2025) plan. Refresh this chart in your browser | Edit the chart in Datastream Announced in 2015, the plan aims to transform China’s export market away from low-cost, low-skilled goods, and towards more advanced technologies in the sectors shown in the chart. Last year, 17% of China’s total goods exports fell into this ‘high-tech’ category,

Refresh the chart in your browser | Edit chart in Datastream As part of Refinitiv’s expanded China coverage, the official measure of China’s high-tech exports has been added to Datastream. This is shown as a proportion of China’s total exports in the chart above. We also include the latest Fathom Consulting estimate, a product of Fathom’s tailor-made RiCArdo database, designed to help assess President Xi’s ‘Made in China 2025’ plan, specifically his progress in transitioning China from low-end manufacturing base to high-tech powerhouse. As shown, the National Bureau of Statistics measure is virtually double that of Fathom’s, but we believe this official

Fathom’s Japan Economic Sentiment Indicator (ESI) rebounded to 4.1% in Q3, up from 3.9% in the previous quarter. The improvement in sentiment was driven by the industrial sector, with the manufacturing Tankan and manufacturing production surveys up on the quarter. However, several corporate sector surveys fell again in September, leading to a slight softening of the ESI for that month. Even though Q2 GDP was strong, there remains a gap between the ESI and economic growth, which we expect to continue to narrow. Refresh the chart in your browser | Edit chart in Datastream Despite attempts to improve bilateral relations, exemplified by

The emerging Asian crisis of 1997/1998 illustrated the dangers of developing economies borrowing too much from abroad — with international investors taking fright and credit drying up, triggering collapsing currencies and recession in those economies. China learnt a lesson from their experience and was determined to industrialise as rapidly as they did, or more so, but without any net borrowing from abroad. The impact of that choice rippled around the global economy and led to the great financial crisis in 2008/2009, and its effects are still reverberating today. One of the effects in the first instance was a supply of

The world is enjoying a synchronised economic upturn. GDP growth forecasts have been revised up in many countries, and emerging market (EM) economies are no different. Brazil and Russia’s emergence from recession has been faster than we — or the consensus — had expected. Meanwhile, economic activity in India is gaining momentum after a sustained slowdown. The 32% rally in EM equities in 2017 is testament to this bullish backdrop. We think the EM GDP growth spurt is likely to be supported by three factors: rising exports; strong investment; and low inflation. EM economies benefit disproportionately from trade, and this

Fathom’s measure of economic activity in China – our China Momentum Indicator (CMI) – fell from March’s two-year high of 3.4% to 3.3% in April. Refresh the chart in your browser | Edit chart in Datastream Our China Momentum Indicator (CMI) fell from by 0.1 percentage points between March and April to 3.3%. A slower pace of annual growth in electricity production and railway freight volumes was responsible. But, at 5.4% and 15.5% respectively, China’s economy continues to be driven by these old growth engines of investment and export-led growth. Yet again Chinese policymakers are opting for the easy route

Latin America looks set to emerge from two years of recession, with GDP growth rebounding sharply this year and accelerating into 2018. Large exchange rate depreciations led to above-target inflation, but that has peaked, leaving economies more competitive than before. Stronger economic growth in the US, destination for a significant share of Latin American exports, alongside a China-driven rise in commodities prices, will help. As with emerging markets more broadly, equities and exchange rates in the region are attractively valued relative to other assets, offering scope for further returns. After contracting in 2015 and 2016, Latin American (LA) GDP looks

Earlier this month it was reported that a delegation of EU statisticians is due to visit Dublin to run a fine-tooth comb through Ireland’s latest set of GDP statistics. As readers of Chart of the Week will no doubt recall, government statisticians last month revised their estimate of growth in 2015 from an already impressive 7.8%, to a literally incredible 26.3%. Such a substantial change was bound to raise a few eyebrows. But if there is any justice, then it is the EU’s own statistical framework, rather than any fat-fingered employee of Ireland’s Central Statistical office, that will be found

Mexico’s IPC stock index has been among the world’s best performing equity indices this month, up around 3% in local currency and 7% in US dollars. The Mexican peso has also been one of the world’s best performing currencies in August. A risk-on mood among investors, higher commodity prices and a rally in emerging market assets more generally have helped. But Mexico has outperformed most other emerging markets and the reason for this seems to be the diminishing prospects of Donald Trump becoming the next US president! Refresh the chart in your browser | Edit chart in Datastream As the

Seiko earnings may get boost from weaker yen.