The Cambridge Weekly – 21 March 2022

Changing tides

Last week we reminded portfolio investors of the importance of making sure that long-term investment decision-making is not overly influenced by short-term market fluctuations. Here at Cambridge, we aim to ensure portfolios remain positioned appropriately, and are fine-tuned when medium-term changes in the economic and market outlook either necessitate adjustments or indeed present new opportunities. The strong rebound in stock markets around the world over the past week has been a case in point.

China benefits from the ‘Beijing Put’

In case you missed it, Chinese stock markets went on a wild ride last week. Shanghai and Shenzhen listed companies on the CSI 300 index dropped 5% on Tuesday, while Hong Kong’s benchmark Hang Seng index dropped almost 6% to its lowest level since 2016. This capped a torrid three trading days for corporate China, with the Hang Seng ending Tuesday’s session down 21.3% year-to-date. Then came an almighty rebound on Wednesday: The CSI climbed 4.3%, while the Hang Seng jumped a whopping 9.1%. It was the latter’s best trading day since 2008.

Why ESG needs to be more than ‘feel-good investing’

What makes a good investment? Usually, one with high returns and low risks. But the answer depends on what you mean by “good”. If you want your money to do good as well as achieve decent returns – as an increasing number of investors do – this also means avoiding morally dubious assets or rewarding righteous ones. This increased the popularity of ‘ethical’ investment options some years ago, but people often disagree about what counts as ethical. This is where ESG investing – where assets are screened for their environmental, social and governance credentials – is supposed to help. ESG offers a clearer set of definitions and makes it easier to align with policy guidelines. Unsurprisingly, there has been a huge growth in ESG investments in recent years.