Brexit brouhaha: A catalyst for growth-enhancing fiscal policy?

Governments could turn to fiscal stimulus rather than relying on central bank monetary policy

Dennis_Matt_sm_150dpi_RGBWhen contemplating the investment implications of Brexit, it’s worth considering the probability that it proves to be more significant than just the latest reason to become further concerned about the investment outlook. Clearly, this is the short-term perspective. In the longer term, however, it’s possible that Brexit could be seen as an inflection point in terms of policy strategy to address global economic travails. Specifically, fears of further populist rebellion could potentially lead governments to growth-enhancing fiscal policy instead of leaving the burden to central bank monetary policy, where the risk/reward arithmetic of zero and negative interest rate policies looks increasingly tenuous.

Dangerous political cocktail

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Negative quarter in Japan, China accompanied by signs of optimism

Yen rises post-Brexit, while China’s economy takes steps to become consumer-driven

Jason_Mark_sm_150dpi_RGBMarkets were down in Japan and China in the second quarter. While it appears Japan will continue to show weakness in the short term, there were several bright spots in China that give us cause for optimism.

Yen strengthens post-Brexit

The Invesco International and Global Growth team continues to be strongly underweight Japan. During the quarter, the Nikkei 225 Index was down over 7% when measured by the yen. However, if we consider a US dollar return, the Nikkei was actually up just over 1%.1

So why did the yen strengthen over 8% in the quarter?

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Brexit clouds the international growth lens

We examine the impact Brexit has had on the markets thus far

Dennis_Matt_sm_150dpi_RGBPrior to the Brexit decision on June 23, global economic, financial and geopolitical conditions were fragile and arguably fraught with no shortage of uncertainty. The outcome of Britain’s referendum vote was therefore anything but welcome, catching many by surprise. Since then:

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Brexit aftershocks: How exposed are convertible securities?

Following recent market turmoil, we answer investor questions about convertibles

Stuart Novick

In the market turmoil that followed the UK’s recent vote to exit the European Union (EU), the Invesco Convertible Securities team received a number of investor inquiries regarding the convertible asset class in general and our fund in particular. Investors have been interested to know about exposures to foreign markets and economically sensitive sectors, volatility and liquidity. Below we address the most frequently asked questions we’ve received about convertible securities, or “converts.”

How much international exposure does the US convertible market have?

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Has the Brexit sell-off created an entry point?

The managers of Invesco International Companies Fund vote ‘yes’

Matt PedenIn the lead-up to the referendum on the UK’s continued membership in the European Union (EU), certain British bookmakers were offering strong odds on bets the UK would opt to exit, anticipating an approximate 25% probability of a leave win.1 At the same time, both sides were running neck-and-neck in the polls,1 rationally implying around a 50% chance of a leave vote result. This is an obvious example of a mispriced bet.

Investing is a much different endeavor,

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