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The Case for Macro

Our Dynamic Allocation Strategies team explains why global macro investing offers many potential benefits when included in an investment portfolio. Read More (PDF)

Emerging Markets Outlook for 2017

The past 12 months have been fairly turbulent in emerging markets, but a number of factors support emerging market performance.  Read More (PDF)

TPP: Asia's Version of Healthcare Reform

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I increasingly view the Trans-Pacific Partnership (TPP) as Asia's version of U.S. healthcare reform: it's messy, a lot has been invested in it, and it won't die.

While the TPP was not approved, an executive order from President Donald Trump formally withdrew the United States from the trade deal.

Similar to U.S. healthcare reform, there is a perceived political trade-off involved with the TPP: Do you go quickly vote for a deal that is tolerable, or holdout for an improved deal that may be better but take much longer?

Japan and Australia still believe that the TPP can move forward and want to use TPP as a way to force reform. Similar to U.S. healthcare reform, there is a perceived political trade-off involved: Do you go quickly vote for a deal that is tolerable, or hold out for an improved deal that may be better but take much longer? Japan and Australia are taking the first option by still pushing to advance it quickly with few changes (other than removing the United States). They also seem to think that there is still some chance the United States will ultimately join.

With the decline of the TPP, the Regional Comprehensive Economic Partnership (RCEP) is gaining traction. This proposed free trade agreement is between the 10 member states of the Association of Southeast Asian Nations (ASEAN) and the six states with which ASEAN has existing free trade agreements (Australia, China, India, Japan, South Korea, and New Zealand). Malaysia is the most motivated to cheerlead this deal, especially as it leverages relations with both China and India. Japan is amenable as well, but wants a leadership role (along with China) and probably a deal that requires more depth.

One caveat: China may have difficulty leading a coalition such as this (especially one in which partners have serious geopolitical misgivings about one another) because the nation historically has not demonstrated this strength or shown the proclivity to lead in this way.

Finally, in regard to trade, Europe and the United Kingdom may be sleepers in the Asia game theater. European nations want to continue to expand trade commitments with Asia and vice versa. They have a common bond in their dislike of Trump's rhetoric. London and Hong Kong are connected as global financial centers and Germany, as always, remains predisposed and keenly interested in global trade.

In our Asia game theater, trade and security issues remain the prominent focus in terms of drivers of investment opportunities and risks.