Japanese Equities, Pound Sterling and Ed-techs
Suganomics & Japanese Equities
I thought the S&P 500 was overvalued at 3450 and I still think we are overvalued at 3350 as we gird for the endgame till election day.
However, my thoughts are now in the Land of the Empire of the Rising Yen now that Suga-san succeeds Abe-san as the next shogun in Tokyo. This could mean a snap election, a dissolved Diet, lower telecom tariffs, a better relationship with China and the LDP factions, a new focus on the digital economy, increasing productivity and corporate operating margins. With the world not positioned for a Japanese bull market, TOPIX at 1600 could be the Cinderella of global equities in 2021, as it was in 2013.
Is it time to accumulate Japanese equities now on the (probably illusory) promise of Suganomics? Hai, tenno heika banzai!
GBP/USD
A negative BOE bank rate will be the kiss of death for sterling because, unlike Switzerland or Japan, the Achilles heel of the UK economy is a chronic current account deficit financed by the kindness of offshore strangers since Britwallas have a lousy savings rate relative to investment needs.
There is also rising political risk on a dodgy UK/EU trade deal. An economic shock means a turmoil in Westminster and an almost certain $100 billion pound QE boost from the Old Lady of Threadneedle Street in November at the precise moment when the US goes to the polls. This means a spike in sterling volatility is inevitable and a cable put at 1.30 could well be a money gusher. Net net, all is not green and pleasant in the currency of the sceptred isle.
Ed-techs
Mirror mirror on the wall, who is the fairest digital growth segment of them all?
I would say online learning and corporate retraining is a $200 billion global market that has 30% secular growth metrics and benefits immeasurably from the current zeitgeist of the COVID-19 pandemic, accelerating digitalization in all spheres of life, chronic need to upgrade worker skills worldwide, telecommuting, economic havoc and fabulous youth demographics and rising internet/smartphone penetration rates.
This is the easy part, the hard part is figuring out who will be the next 5X pre-IPO company in the global edutech village. Any ideas?
Matein Khalid is the Chief Investment Officer of Asas Capital Management. He has 25 years of experience in international capital markets as an advisor to family offices and fund managers. He has worked for investment banks/hedge funds in New York, Chicago, London, and Geneva. In addition, he has been the CIO of a technology fund in San Francisco, a royal investment office in Dubai and a public insurance company listed on the DFM.