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Cameron Brandt, EPFR Director of Research, reflects on how he sees January unfolding:

January marks the final month of the Year of the Dog in China before the transition to the Year of the Pig in early February. What kind of economic baton will the dog hand the pig?

  • Fears about the trajectory of China’s economic growth will dominate January, the more so because the screen will go fuzzy at month’s end as millions of Chinese citizens stop working and travel to see their families during the Lunar New Year holiday. If the polite fiction that China is growing at over 6% is seriously challenged – and Apple’s CEO may have already done that – then 2019 will start the way 2018 left off.
  • US politics will hit Sector Fund groups hard in January. Healthcare Funds will take over from Financial Sector Funds as the least loved, with the latest round of drug price hikes throwing fresh fuel on what is already likely to be a bruising and unsettling battle between Trump and Pelosi over the direction of US healthcare.
  • Investors looking for oversold markets and asset classes will focus on Italy (the UK will hog the bad headlines) and South Africa (there is a reform story and gold is beginning to shine again). Their focus may be measured in weeks rather than months.

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