James Spence

Over the past 10 years - in the liberal parts of the world at least - political and financial economies have forked apart. The large scale corporate world has become stronger as government authority has paled. Doubtless, on the government side of the ledger, this is partly due to an erosion of faith in governments following their interventions to save banks and shore up the indebted after the Global Financial Crisis. Large companies which are not banks have been able to take a free ride on a progressively cheaper cost of capital and load up on cost-saving technologies. With freely available capital and cheap debt, companies have variously invested, bought out competitors, lifted their dividends and bought back their own shares. In the US, buy-backs have become a mania. Strong companies have become stronger and companies of all types have become greatly better at marshalling technologies. Technology, often spoken of as a disrupter and a general threat, has in fact facilitated a multitude of improvements in the way in which business is conducted: benefits that accrue to the adopting company if not always their customers who rightly sense they are being kept at bay. For example, by computer driven enquiry [...]

On the last page of his book, Homo Deus, Yuval Noah Harari poses the questions: “What’s more valuable – intelligence or consciousness? Intelligence is decoupling from consciousness. What will happen to society, politics, [investment] and daily life when nonconscious but highly intelligent algorithms know us better than we know ourselves?” I have added the word investment. This book certainly sets the mind noodling. We are often being told – mainly by academics and parts of the FT – that there is little point in active asset management. Their conclusions, often as not, are based on the average performance of the average manager. We think not and wish to rebutt such a reductive line in reasoning. Who would ever be interested in the average outcome from an unsampled universe? In football, there is little point in supporting an average team – unless you happened to come from the town itself. That’s why people all over the UK (and wider) support Liverpool, Manchester United and Arsenal and why Mansfield Town – who finshed exactly half way down League Two last season – has an average home gate of 3,774. To our minds, the universe of – equity managers in this case – [...]

The stimulating free port of Hong Kong remains a compelling eye glass through which to comprehend China, its politics and economy. All its 5.5 million adult inhabitants are China watchers, by inclination or necessity. Their world view was formed, to some extent, by the Cultural Revolution. The most recent arrivals in Hong Kong are investors from China and increasing numbers of economic migrants from Europe, most notably France. The latter’s response to the despoir of home is to find hope in Hong Kong. "Try Hong Kong" they used to say, not always in kindness. Like London, Hong Kong operates as a safe-haven from volatile regimes: a portal through which Chinese capital passes, sufficiently easily to slay the notion that China’s capital account has effectively closed. Somewhere in the past two years - and its is difficult to say precisely when – the authorities in Beijing ceded their former near total authority on its currency policy with respect to the renminbi (RMB). The secondary effects of running so much capital through a thin spigot into Hong Kong are increasingly bad for the bulk of the population. Property prices there are debilitating to those without established ownership, small businesses struggle and young [...]

The election of Donald Trump has caused perturbation from Baltimore to Beijing: a rude volte face to the graceful Obama years, a reversal of international liberal orthodoxy, a rebuttal of globalisation, an aggressive restatement of weaponised American hegemony, and on. Those that voted for him love it, much of the rest of the world is aghast. While many are offended, some are amused. In politics, the next few years will be a wild thrash. This may not last long and hopefully no warheads are loosened off. Part of the emerging mash of policy – on energy most notably – look like bizarre refutations of global trends that will not brook reversal. Others - resisting China’s claims over the Western Pacific - maybe overdue. There is more to come. Trump did not find time in the first week of his Presidency to fall out with Janet Yellen and the Federal Reserve. As sure as apples is apples, that will happen. It is not a great time to be an agency wonk in America. Under the last administration, even the hunting down of Osama Bin Laden was a meditative affair, a point captured in the line from Zero Dark Thirty where a [...]