More broadly, most of the world’s economies are subject to decent growth and elevated inflation as the recovery from the pandemic continues at varying speeds. Going forward, we see a general plurality of central banks considering some formulation of tighter policy. China, however, is moving in the opposite direction. A combination of far stricter COVID restrictions, a vaccine (Sinovac) that appears less effective in preventing the virus than the MRNA vaccines used elsewhere and an economic policy focused on restraining the property sector over leverage concerns and general fiscal prudence has resulted in much slower growth than seen historically. In China, monetary policy appears to be leaning more towards accommodation than tightening. The degree to which the Chinese economy may be out of sync with much of the rest of the global economy is highly noteworthy and offers both investment opportunity as well as an insight into how the ‘multi-polar’ world may operate going forward.




1 Source: Trading economics, 10 March 2022.




Credit spread: The difference in the yield of corporate bonds over equivalent government bonds.


Consumer price index (CPI): A measure that examines the price change of a basket of consumer goods and services over time. It is used to estimate ‘inflation’.


Duration: How far a fixed income security or portfolio is sensitive to a change in interest rates, measured in terms of the weighted average of all the security/portfolio’s remaining cash flows (both coupons and principal). It is expressed as a number of years.


Fiscal: Connected with government taxes, debts and spending.


Inflation: The rate at which the prices of goods and services are rising in an economy.

The use of borrowing to increase exposure to an asset/market. This can be done by borrowing cash and using it to buy an asset, or by using financial instruments such as derivatives to simulate the effect of borrowing for further investment in assets.


Monetary policy: Central bank policies aimed at influencing the level of inflationand growth in an economy. It includes controlling interest rates and the supply of money. Monetary stimulus refers to a central bank increasing the supply of money and lowering borrowing costs. Monetary tightening refers to central bank activity aimed at curbing inflation and slowing down growth in the economy by raising interest rates and reducing the supply of money.


Terminal rate: Also called the natural or neutral interest rate.  It is the rate that is consistent with full employment and capacity utilisation and stable prices.


Yield curve: A graph that plots the yields of similar quality bonds against their maturities. In a normal/upward sloping yield curve, longer maturity bond yields are higher than short-term bond yields. A yield curve can signal market expectations about a country’s economic direction.


Yield: The level of income on a security, typically expressed as a percentage rate.


Volatility: The rate and extent at which the price of a portfolio, security or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. It is used as a measure of the riskiness of an investment.