[15 June 2021] Recently it has come into the attention of Pictet Asset Management ("Pictet AM") that our trade name “瑞士百达”、“Pictet” 、“瑞士百达资管” and/or our logo have been misused by unauthorized persons in Mainland China and Hong Kong for illegal fund-raising from Chinese investors, such as providing retail investors with stock trading training and account opening and stock trading services in the name of "Pictet Asset Management" via mobile apps and chat groups. Some Chinese individual investors have alleged that they have suffered losses due to such fraud. We reserve all our legal rights to take legal actions against such unauthorized usage of our name and/or logo which may lead to reputational loss on us.
Pictet would like to alert the public and hereby declares the following:
Pictet AM's only official website is www.am.pictet and Pictet Asset Management's mobile apps (i.e. Pictet AM) are only available for download at App Store and Google Play. All other webpages and apps other than aforementioned are unrelated to Pictet.
Pictet AM’s mother company Pictet Group’s only official Wechat account is “瑞士百达 Pictet” (Wechat ID: Pictet_1805). Prix Pictet, a Pictet Group’s photography award also owned a Weibo account “百达摄影奖PrixPictet”. Pictet AM has not registered or operated any website, online application or platform in Mainland China under its own name, such as app and official Weibo account. We will not conduct any distribution activities in China via chat groups of WeChat, QQ or any other instant communication tools.
We only sell products through licensed financial institutions to individual investors in Hong Kong and Mainland China and have no direct sales channels. Except for Pictet Strategic Income fund distributed under the Mainland China – Hong Kong Mutual Recognition of Funds scheme, Pictet AM has not issued any fund or wealth management product to retail investors in Mainland China.
We would like to remind all investors to be vigilant and conduct sufficient due diligence before making any investment. If you have suffered any loss due to illegal activities, it is advisable to timely report the case to local police. If any disclosure of personal information is involved in Hong Kong, you may file the complaint with the Office of the Privacy Commissioner for Personal Data or any other relevant Hong Kong authorities for protection of personal data privacy.
Pictet Asset Management (Hong Kong) Limited
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In a year dominated by macroeconomic and geopolitical events we delve into how much macro really matters.
Written by
John Moorhead
Head of Emerging Equities
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So far in 2018 an emerging market investor has seen macroeconomic and geopolitical factors dominate front and centre. The list includes: Fed rate hikes, US China trade war risks, twin deficits and currency devaluations in Turkey and Argentina, economic sanctions on Russia, unpredictable political outcomes in Mexico, Brazil, Malaysia, and the prospect of denuclearizing North Korea.
Against this backdrop it is easy to forget that the main driver of EM equity returns is typically stock specific factors.
Breaking down emerging market returns
Of course, macro does matter, but as the chart below shows it accounts for no more than half of the story at most, and this is particularly so at market extremes.
Over the past c.20 years, stock specific risk has accounted for the majority of emerging market returns.
Emerging market returns breakdown
Source: Deutsch Bank, May 2018
So why is so much discussion centred on macro?
Well, by and large, I would argue it is because for most people talking about macro and geopolitics is easier than in-depth company analysis. For example, discussing the political situation in India or the crisis in Turkey is much more interesting than talking about the supply/demand balance of the Chinese cement market. (Although members in our team would certainly dispute that!). Also, countries and macro considerations are something you can visit and see. If you visit Brazil, you can arguably form an assessment of Brazil as a country and its culture. It is something one can actually experience. The MSCI EM Utilities index is not palpable in the same way and the financial statements of its constituents are not particularly memorable for most observers. Additionally, macro is largely what the media concentrates on. For example, mainstream news channels will focus on Russia’s political interactions with the West, rather than the encouraging shareholder return policies implemented by many Russian oil producers.
Economic growth is not the same as stock market growth
Despite the overinflated extent to which we discuss macro, the reality is that there is only a minor link between GDP growth and stock market returns. GDP growth can drive earnings, but the stock market’s growth is not the same as the economic growth. In particular, this thinking ignores valuations as the starting point, which can be a significant driver of stock prices. It is true, however, that actual GDP growth and market returns display a positive link in most instances (Korea being the exception that proves the rule in the left hand chart below). This however is an ex-post analysis. As investors in the present moment, we only have access to GDP forecasts and unfortunately as the right hand chart below shows these are very poor predictors of stock market returns.
Realised GDP is linked to market returns... but not forecasts, which are often wrong
Source: UBS, May 2018
So if stock markets are mainly driven by stock specific risk, and economic forecasts are largely futile, why bother looking at macro data? Of course macro matters but as we said already mainly at the extremes. And by extremes, we mean at points of financial and economic crisis. We work closely with Pictet Asset Management’s economics department to monitor 7 key indicators that have preceded previous financial crises. They are considered relative to their history and relative to other economies. The key benefit of these indicators is they can help us calibrate the conviction of our stock picks and determine critical areas of risk. For example, over the years Chinese financials, and property names in particular, should have been caught up in some crisis by now if we had listened to the macro headlines. But the reality is that these sectors have outperformed global emerging markets.
Volatility has clearly returned to global markets, and in the emerging world the volatility is often amplified due to the economic and political precariousness of specific countries. More than ever, focusing on what really matters is critical – and most of the time that is stock picking. So to answer my initial headline. Yes, macro matters some of the time when picking EM stocks but never more than stock-specific, ‘microeconomic’ factors.
About
John Moorhead
About
John Moorhead
An ardent believer in value investing, John Moorhead has been looking at emerging market stocks through the value lens since joining Pictet Asset Management as a Materials analyst in 2008. His research-focused background is most evident in the influence he has had in shaping the group’s rigorous investment process. In addition to his responsibilities as Head of Emerging Equities, John is also part of the portfolio management teams for the Global Emerging Markets and the Global Emerging Market High Dividend strategies. John graduated with a Bachelor of Mining Engineering (Hons) from the University of Queensland and holds a Graduate Diploma from the Securities Institute of Australia. He is a CFA charterholder.
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This document is used for informational purposes only and does not constitute, on Pictet Asset Management part, an offer to buy or sell solicitation or investment advice. It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. The effective evolution of the economic variables and values of the financial markets could be significantly different from the indications communicated in this document.
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. Pictet Asset Management has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.
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EU countries: the relevant entity is Pictet Asset Management (Europe) S.A., 15, avenue J. F. Kennedy, L-1855 Luxembourg
Switzerland: the relevant entity is Pictet Asset Management SA , 60 Route des Acacias – 1211 Geneva 73
Hong Kong: this material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.
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For US investors, Shares sold in the United States or to US Persons will only be sold in private placements to accredited investors pursuant to exemptions from SEC registration under the Section 4(2) and Regulation D private placement exemptions under the 1933 Act and qualified clients as defined under the 1940 Act. The Shares of the Pictet funds have not been registered under the 1933 Act and may not, except in transactions which do not violate United States securities laws, be directly or indirectly offered or sold in the United States or to any US Person. The Management Fund Companies of the Pictet Group will not be registered under the 1940 Act.
Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in North America to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).
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