China PMI

The China data shows a bounce from heart-attack-inducing to a comparative just-a-little-bit-of-not-expanding-hence-below-50.

Commodities are enjoying the data, although they’ve been signalling their belief in stimulus for some time now (and that such stimulus will work).

We believe that over the long run, this approach cannot work (i.e. supply-side measures aimed at bolstering fixed asset investment) and that all it will accomplish is an increase in debt.

As such, we remain broadly content with our underweight to commodities, painful though it might be at the moment, within our direct equity portfolios.

However, at the overall multi-asset portfolio level, our various capital deployments, ~4% of equities purchased since March, as the various regions sold off (e.g. European equities at the outset of the war, Emerging market equities after the China tech/property crackdown, and so on) will put us in quite good stead as markets rally, with that market rally (and bolstered sentiment) a function of data exactly like that shown above.

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This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

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