Our Perspective
Our Perspective Articles
Nov 11, 2024
Conceptually it is the difference between the rate one would seek in lending to a bank versus the sovereign
Bank lending rates can be replicated using swap rates and hence are essentially a derivative
lending to sovereign of course requires balance sheet
so if swap rates are in -ive territory, it indicates balance sheet stress
of course, central bank can come in and relieve
so you can get more yield lending to sovereign
because that would involve tying up balance sheet
Morgan Stanley coined the term “rent on balance sheet” in 2009
For background please refer to links:
major beneficiaries.
Apple to shift all US iPhone assembly to India by 2026 amid trade war with China
China, Korea, Japan and effects on APAC/India.
China’s population fell for a third consecutive year in 2024, with the number of deaths outpacing a slight increase in births, and experts cautioning that the trend will accelerate in the coming years.
The National Bureau of Statistics said the total number of people in China dropped by 1.39 million to 1.408 billion in 2024, compared to 1.409 billion in 2023.
EM equities may benefit
Emerging-market (EM) equities are off to a strong start in 2025, up 4.5% through March 14 in US-dollar terms. But investors could be excused for being wary. After all, emerging markets have struggled over the past decade.
Yet today, EM equity fundamentals are gaining momentum on the strength of upward-trending earnings estimates. And performance looks better from a longer-term perspective. Our analysis shows that, despite fluctuations, EM stocks have outpaced their developed-market (DM) counterparts since 2001 (Display). This long-term performance gap, coupled with the pratfalls of trying to time the market, makes it risky for investors to be on the sidelines, in our view—especially if emerging markets can sustain their recent gains.
Economic slowdown induced reval is possible
In the United States, the issue of “twin deficits” is expected to resurface, raising questions about the value of the dollar.
