The forces. Not the headlines.
Analysis and commentary on markets, companies, and the forces that move them.
How Sovereign Risk Enters Equity Valuation
The same company listed in different countries can carry systematically different valuations, and part of that has nothing to do with the company. It reflects how the market prices the country's overall risk.
How Tax Erodes Cross-Border Returns
Tax treatment of foreign investment is spread across several layers, and their combined effect regularly exceeds what investors expect. These costs can be established in advance and are rarely included in return estimates.
Depositary Receipts and Ordinary Shares: Two Prices, One Company
Depositary receipts let investors buy foreign companies in their own market and currency. The same company therefore has two prices, and the relationship between them has several details worth understanding.
Trading Session Overlap and the Distribution of Volatility
Global equity markets open across different time zones, and volatility is not spread evenly through a trading day. The structure of session overlap determines where liquidity and price discovery concentrate.
Pricing Multinationals in a Deglobalising World
A substantial part of what multinational companies are worth rests on the operating conditions globalisation provided. As those conditions change, valuations adjust in a way that differs from an ordinary cycle.
How Emerging Market Index Weights Are Set
Country weights in emerging market indices direct hundreds of billions of dollars. Those weights come from a specific set of technical rules that the people relying on them rarely examine.
The Investability Question in China
A clear gap exists between the size of China's economy and the weight its equities carry in global indices. The gap arises from a set of technical and institutional conditions, and understanding them is more useful than assessing any single event.
India: Scale, Valuation and Access
India's weight in global indices rose substantially over the past decade. Its scale, valuation levels and the conditions facing foreign investors form a set of interrelated characteristics.
The Korea Discount: Governance and Structure
Korean equities have long traded below markets at comparable levels of economic development, a phenomenon with its own name. Its causes have been widely studied, and most explanations point towards governance and ownership structure.
Taiwan: Market Concentration and Global Linkage
Taiwan's weight in global equity market value is modest while its sector concentration ranks among the highest of any major market. That structure determines its volatility characteristics and what it moves with.
Where the European Discount Comes From
European equities have long traded at lower valuation multiples than United States equities, and the gap widened across the past two decades. Part of it is structural and part is arithmetic arising from composition.
Japan: Thirty Years and Governance Reform
Japanese equities spent three decades below their nineteen eighty-nine peak. Among the changes of recent years, corporate governance reform is one of the few with a structural character.
The Blurring Line Between Developed and Emerging Markets
The developed and emerging classification directs trillions in allocation. The gap between the criteria behind it and present reality has widened across the past two decades.
How Currency Eats or Amplifies Foreign Returns
The return on a foreign asset has two components: what the asset did, and what its currency did against the investor's own. The second is frequently large enough to dominate the result.
The Long-Run Record Outside the United States
United States equities delivered among the strongest returns of any major market across the past century. Using that record to infer the long-run characteristics of markets generally runs into several structural problems.
The Gap Between Global Market Weights and What Investors Actually Hold
The distribution of world equity market value is a verifiable fact. What most investors actually hold sits a long way from it, and the direction of the gap is the same in nearly every country.
Home Bias: Why Most Investors Underweight Most of the World
Investors everywhere hold overwhelmingly domestic stocks — often 80–90%+ — even when their home market is a sliver of global value. Why home bias happens, and what global exposure does and doesn't do.