2020年12月14日 星期一

The Renminbi Will Gain Wider Use Globally, Gavekal's CEO Says

www.zerohedge.com

Authored by Resham Kapadia via Barrons.com,

Louis-Vincent Gave, CEO of Gavekal, is a go-to source for institutional investors trying to interpret global macro risks such as the financial implications of China’s rise. Gave, 46, was born in Paris, educated at Duke University, and based in Hong Kong before the pandemic. Gavekal provides independent research and manages $1.7 billion in Asian fixed-income and equities strategies, primarily for European institutions.

Louis-Vincent Gave: If I ask what the most important development was in 2001, most people would say it was 9/11. With the benefit of hindsight, it was China joining the World Trade Organization, which changed the world for the following 20 years. If I ask about 2007, you’d say it was the start of the subprime crisis. With the benefit of hindsight, it was the launch of the smartphone.

With hindsight, what will people say about 2020?

So far, the Covid response in the U.S. has been a $12,800 increase in debt per capita; in the United Kingdom, it’s $7,000, and in Germany and France, $5,300. In China, it’s $1,200. The Western world responded with massive increases in budget deficits, which could constrain future policy options, while Asia, especially China, hasn’t.

Western policy makers have no choice but to embrace yield-curve controls; they can’t let interest rates go back up. You had Japan and Europe in the yield-curve control gang. The big change now is that the U.S. has joined them. Once the European Central Bank went down this [path], the euro tanked. Once we are on the other side of Covid-19 and it becomes clear the U.S. has no other choice, the dollar will collapse.

What will be the best investment opportunity post-Covid?

Investing in Asian fixed-income markets, in local currencies. Governments there have broadly been more efficient at dealing with Covid-19. Central-bank balance sheets and government spending haven’t grown out of control. Just as water flows downhill, capital is attracted to positive real [inflation adjusted] rates. Today, these are mostly found in Asia.

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