NEWS
28 Mar 2025 - DeepSeek is much more than the Sputnik Moment
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DeepSeek is much more than the Sputnik Moment Ox Capital (Fidante Partners) February 2025 The introduction of DeepSeek into the market exemplifies the technological advancements that Chinese companies have achieved in recent years. Through company visits and discussions with local experts, we are seeing significant technological advancements in China. These developments are partly driven by necessity, in response to increasing restrictions from its global competitor, the United States. In addition to DeepSeek, platforms like TikTok and Temu have grown on Western consumers. They are leapfrogging the traditional internet platforms and driving convergence in social and e-commerce. Beyond these visible changes, there are numerous technological advancements that may not be immediately apparent to consumers. These include developments in robotics, electric vehicles, batteries, renewable energy such as solar and wind, and nuclear energy. The large domestic market, availability of low-cost and skilled engineers, access to capital, and affordable infrastructure have contributed to China's significant share in global manufacturing. China accounts for about ~33% of global manufacturing capacity, exceeding that of G7 countries combined. This percentage is expected to grow as Chinese companies make progress in new (and higher value) industries. Consequently, the economy can produce a wide range of products at very low cost at scale, except for high-end semiconductors (at present). 
With its huge, educated work force, ample spare capacity, and large domestic market, entrepreneurs are afforded a runway to build great businesses. For instance, a hedge fund manager has managed to innovate and develop DeepSeek, a cost-effective AI solution. Similarly, several Chinese companies are poised to become significant players in robotics and are likely to be major suppliers of robotics components globally. Robotics may be the next high tech success story in China, following the footsteps of the domestic EV makers. The challenging transition in China was due to a realization by domestic authorities that the ever-expanding construction sector would eventually lead to negative consequences for the economy. Therefore, a shift towards quality and sophisticated products was deemed necessary. This transition is nearly complete, and the benefits of these efforts are expected to emerge as these new growth sectors begin to offset the decline in traditional industries such as property construction, which has experienced a significant reduction of approximately 70% from its peak. The re-orientation towards quality has resulted in local players gaining market share in almost all industrial and technological sectors domestically. This trend may extend to the rest of the world, depending on trade dynamics in the coming years. The cost and quality advantages of Chinese cars, batteries, robots, and AI are expected to be highly appealing globally. While some countries may choose to block BYD or DeepSeek, they will be stuck with gas guzzlers and expensive AI models while the rest of the world get to benefit from having stronger ties with China and its companies! At Ox Capital, we own a number of innovative businesses in China that we believe will become global champions. We firmly believe we own companies that are going to disrupt industries rather than those that will be disrupted. Given the negativity that is still prevalent on Chinese (particularly in Hong Kong) shares, the plethora of opportunities is too good to ignore!  Funds operated by this manager: Ox Capital Dynamic Emerging Markets Fund Important Information: This material has been prepared by Ox Capital Management Pty Ltd (Ox Cap) (ABN 60 648 887 914) Ox Cap is the holder of an Australian financial services license AFSL 533828 and is regulated under the laws of Australia. This document does not relate to any financial or investment product or service and does not constitute or form part of any offer to sell, or any solicitation of any offer to subscribe or interests and the information provided is intended to be general in nature only. This should not form the basis of, or be relied upon for the purpose of, any investment decision. This document is not available to retail investors as defined under local laws. This document has been prepared without taking into account any person's objectives, financial situation or needs. Any person receiving the information in this document should consider the appropriaten |
27 Mar 2025 - Performance Report: TAMIM Fund: Global High Conviction Unit Class
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27 Mar 2025 - Tim Hext: Three key takeaways from Australia's latest national accounts data
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Tim Hext: Three key takeaways from Australia's latest national accounts data Pendal March 2025 |
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IT'S been five years this week since the Covid chaos emerged. Aftershocks have kept rolling in since then. But is the Australian economy finally starting to look more "normal"? The latest set of Australian national accounts (see below) shows Gross Domestic Product growth at 0.6% for the December quarter, suggesting that conditions may, indeed, be moving closer to normal. Why is that? Below are three takeaways from the latest data. 
The consumer is finally emerging, albeit tentatively, as a positive impact on the economy. Household consumption grew by 0.4%, contributing 0.2% to the 0.6% overall GDP growth. The contribution had been near zero over the previous year. Consumers finally had positive real wages growth in 2024 (3.2% wage growth versus 2.5% inflation). Consumers also spent some of the Stage 3 tax cuts since July. We estimate that around 25% was spent and 75% saved, helping the savings rate to climb to 3.8% from below 3% a year ago.
Government consumption grew by 0.7% in Q4, driven largely by the states. This is at least moderating from near 1.5% growth a quarter earlier. Government investment also moderated but remains high at 1.8% over the quarter. Overall, the public sector contributed 0.2% to the 0.6% growth. The government needs to keep moderating spending and investment if the re-emerging consumer is to avoid causing inflationary pressures. In many areas of the economy, the private and public sectors compete for supply of labour, capital and goods.
Private investment rose only by 0.3% in the quarter. Business investment is showing some signs of life, but dwelling investment is falling -- not helped by high rates. There are, as always, different stories in different sectors. But the overall picture is productivity continuing to flat-line. GDP per hour worked fell again and is 1.2% lower over the year. The focus on Australia's poor productivity is becoming a bigger issue. Everyone has their reasons for it and different lobby groups will shift blame, promoting their own solutions (which normally involve government hand-outs). However, I did come across the graph below courtesy of Minack Advisors. 
Put simply, as our capital-to-labour ratio has fallen, so has labour productivity. Net investment to GDP is around the lows of the past 50 years against labour force growth at the highs (courtesy of immigration and participation). Overall, the latest today's national accounts report offers some hope of GDP moving back to the 2% to 2.5% the RBA is looking for. However, unless we can start improving productivity, we will be running to stand still. Author: Tim Hext |
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Funds operated by this manager: Pendal Global Select Fund - Class R, Pendal Horizon Sustainable Australian Share Fund, Pendal MicroCap Opportunities Fund, Pendal Multi-Asset Target Return Fund, Pendal Sustainable Australian Fixed Interest Fund - Class R, Pendal Sustainable Australian Share Fund, Regnan Credit Impact Trust Fund, Regnan Global Equity Impact Solutions Fund - Class R |
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This information has been prepared by Pendal Fund Services Limited (PFSL) ABN 13 161 249 332, AFSL No 431426 and is current as at December 8, 2021. PFSL is the responsible entity and issuer of units in the Pendal Multi-Asset Target Return Fund (Fund) ARSN: 623 987 968. A product disclosure statement (PDS) is available for the Fund and can be obtained by calling 1300 346 821 or visiting www.pendalgroup.com. The Target Market Determination (TMD) for the Fund is available at www.pendalgroup.com/ddo. You should obtain and consider the PDS and the TMD before deciding whether to acquire, continue to hold or dispose of units in the Fund. An investment in the Fund or any of the funds referred to in this web page is subject to investment risk, including possible delays in repayment of withdrawal proceeds and loss of income and principal invested. This information is for general purposes only, should not be considered as a comprehensive statement on any matter and should not be relied upon as such. It has been prepared without taking into account any recipient's personal objectives, financial situation or needs. Because of this, recipients should, before acting on this information, consider its appropriateness having regard to their individual objectives, financial situation and needs. This information is not to be regarded as a securities recommendation. The information may contain material provided by third parties, is given in good faith and has been derived from sources believed to be accurate as at its issue date. While such material is published with necessary permission, and while all reasonable care has been taken to ensure that the information is complete and correct, to the maximum extent permitted by law neither PFSL nor any company in the Pendal group accepts any responsibility or liability for the accuracy or completeness of this information. Performance figures are calculated in accordance with the Financial Services Council (FSC) standards. Performance data (post-fee) assumes reinvestment of distributions and is calculated using exit prices, net of management costs. Performance data (pre-fee) is calculated by adding back management costs to the post-fee performance. Past performance is not a reliable indicator of future performance. Any projections are predictive only and should not be relied upon when making an investment decision or recommendation. Whilst we have used every effort to ensure that the assumptions on which the projections are based are reasonable, the projections may be based on incorrect assumptions or may not take into account known or unknown risks and uncertainties. The actual results may differ materially from these projections. For more information, please call Customer Relations on 1300 346 821 8am to 6pm (Sydney time) or visit our website www.pendalgroup.com |
26 Mar 2025 - Performance Report: DAFM Digital Income Fund (Digital Income Class)
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26 Mar 2025 - Performance Report: Insync Global Capital Aware Fund
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26 Mar 2025 - Trump's 'Period of Transition': Economic Reset or Market Risk?
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Trump's 'Period of Transition': Economic Reset or Market Risk? JCB Jamieson Coote Bonds March 2025 Park your politics at the door, the changes that are occurring in the US, and thereby global markets - rightly or wrongly - are reshaping the financial market landscape at a frightening speed. Market uncertainty has surged following recent developments in US President Donald Trump's trade and economic policies. Investors hoping for US government support are likely to be bitterly disappointed by US Treasury Secretary Scott Bessent's remarks, as he dismissed the 10% equity selloff as "healthy" and "normal." Bessent further suggested that a market correction was necessary to prevent against euphoric markets, which he warned could trigger a financial crisis. He also cautioned that there were "no guarantees" that the US economy would not fall into a recession. These comments follow on from President Trump's comments last week, in which he asserted that the economy had to go through a "period of transition," arguing that previous growth had been "fake" under excessive government spending. This insistence ― that some 'short term pain for long term gain' has been sighted as the cause for weakness in equity markets. The Trump administration's efforts to slow the economy by cutting government spending and disrupting global relationships and trade agreements continue to unsettle investors. These developments have seen market and economic forecasters rapidly slashing their estimates for 2025, chopping any kind of positive outcomes from the suggested economic path. Status quo, or a weakening in the economy now seems to be the destination ahead if the current policy combinations remain in play - and potentially a significant weakening at that. This has been jolting for many market watchers who felt 2025 would be a constructive year under the business-friendly administration of Trump, especially given previous claims that the US economy was "exceptional." After a surge of optimism in post-election data, fuelled by expectations that tax cuts and deregulation would herald a new economic boom--sentiment has taken a sharp turn. Soft survey data has completely collapsed, taking the widely watched Atlanta Federal Reserve GDPNow tracker, a predictive tool which tries to read the health of the current economy in real time without the usual lags, to a scary -2.4% reading. This suggests the economy has hit stall speed and then some. Future outlook and investor cautionWe are yet to see such deterioration in the 'hard' data, but it does require close attention for investors, as the market will likely be punishing of anything suggestive that growth is slipping, such as falling retail sales or rising unemployment. While there is still a collective concern around the inflation outlook, especially as inflation expectations have risen, incoming inflation data shows signs of moderating, supported by declining oil prices and weaker demand for travel. However, falling growth indicators are likely to overtake inflation concerns in driving market sentiment. Historically, when growth falters, inflation is usually snubbed out very quickly due to demand destruction. Such a development would likely activate the US Federal Reserve (US Fed), which has remained in a holding pattern after last year's 100 basis point rates cuts - a non-stimulatory cutting cycle to match victories in fighting excessive inflation. The US Fed had moved to a "watch and see" holding pattern, keen to monitor the impact of Trump's policies on the economy. If economic conditions evolve with a material downside skew, a key question for markets will be how US Fed Chairman Jerome Powell responds to support the economy, particularly at a time when potential tariff-induced price rises could temporarily push inflation higher. This is a difficult policy combination, but the US Fed can potentially look through such a development, as many tariffs have yet to make a significant impact. In a "Trumpian" world, these tariffs might even fail to materialise just as quickly as they were enacted. The extent to which tariffs may drive inflation remains highly uncertain, providing Powell some wiggle room with US Fed policy. However, such look through is unlikely on the growth front. We have written at length on the feedback loops from stalling growth (remember the terminologies of 'hard', 'soft' or 'no' landing). If growth stalls it can be very difficult to reactivate without a 'stimulatory'' rate cutting cycle of significant magnitude. That is hardly a base case, but that outcome is growing in probability as the left tail of significantly higher rates is mitigated by the DOGE (Department of Government Efficiency - led by Elon Musk) effect on the economy. While risks remain, the prevailing sentiment suggests that authorities are prepared to act if markets experience deeper corrections. However, they are reluctant to overstep unless the situation becomes truly dire. Otherwise, further corrections remain "healthy". This is a colossal change worthy of your attention. As such, any notion of a Trump "put" seems further away for now. In other words, the idea of Trump stepping in to prop up markets in a crisis is less immediate than previously thought. In light of the uncertainties, particularly around the evolving economic landscape and potential policy shifts, investors need to be cautious and reassess their exposure to sectors vulnerable to policy changes, trade disruptions, and global economic slowdowns. While the US Fed's cautious stance offers some breathing room, the lack of definitive government support raises the likelihood of volatile market conditions ahead. Charlie Jamieson, Chief Investment Officer Funds operated by this manager: CC Jamieson Coote Bonds Active Bond Fund (Class A), CC Jamieson Coote Bonds Dynamic Alpha Fund, CC Jamieson Coote Bonds Global Bond Fund (Class A - Hedged) |
25 Mar 2025 - Performance Report: Insync Global Quality Equity Fund
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25 Mar 2025 - Performance Report: DS Capital Growth Fund
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25 Mar 2025 - Manager Insights | Insync Fund Managers
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Chris Gosselin, CEO of Australian Fund Monitors, speaks with Monik Kotecha Chief Investment Officer at Insync Fund Managers. Insync Fund Managers operate two funds, the Insync Global Capital Aware Fund (hedged) and the Insync Global Quality Equity Fund (unhedged). The two funds have the same strategy, the only difference being that one is hedged and the other is unhedged. The Insync Global Capital Aware Fund has a track record of 15 years and 5 months and has underperformed the All Countries World (AUD) benchmark since inception in October 2009, providing investors with an annualised return of 11.16% compared with the benchmark's return of 11.99% over the same period. At the same time, the Insync Global Quality Equity Fund has a track record of 15 years and 5 months and has outperformed the All Countries World (AUD) benchmark since inception in October 2009, providing investors with an annualised return of 13.06% compared with the benchmark's return of 11.99% over the same period.
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25 Mar 2025 - Glenmore Asset Management - Market Commentary
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Market Commentary - February Glenmore Asset Management March 2025 Globally, equity markets were weaker in February. In the US, the S&P 500 declined -1.4%, the Nasdaq fell -4.0%, whilst in the UK, the FTSE was bucked the trend, rising +1.6%. Domestically, the ASX All Ordinaries Accumulation index performed poorly, falling -4.0%. On the ASX, the top performing sectors were utilities and consumer staples, whilst technology and real estate underperformed. During the month, the Reserve Bank of Australia (RBA) cut interest rates by 25 basis points (bp), the first reduction in four years. Whilst the move was positive for equity markets, it was largely expected so had minimal impact in February. Comments for RBA Governor Michele Bullock that bond markets have been too bullish in their hopes with regards to the number of further rate cuts in 2025 had a significantly more negative impact on sentiment, though we continue to believe additional rate cuts will occur over the next 12-24 months. Bond yields declined modestly in February. The US 10-year government bond yield fell -6.6 basis points to close at 4.24%, whilst in Australia, the 10-year bond yield fell -13bp to close at 4.30%. Funds operated by this manager: |
