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UK’s Weaker Growth Presents Challenges For Policy Makers

According to Azad Zangana, Senior European Economist & Strategistat Schroders, the fact that the UK economy slowed more than expected, presents challenges for policy makers.

The preliminary estimate of UK GDP for the third quarter showed economic growth slowing to 0.5% quarter-on-quarter compared to 0.7% in the previous quarter. Consensus expectations were for a small slowdown to 0.6%, “but the latest figures disappointed as the manufacturing sector struggles with a strong pound and subdued external environment,” says Zangana.

Adding that, within the details of the GDP report, the recession in the manufacturing sector continues with activity contracting by 0.3%. The wider measure of industrial production did however grow by 0.3% thanks to a pick-up in mining and quarrying activity. The services sector grew by 0.7%, as strong retail sales maintained solid growth in distribution, hotels and restaurants. Business services also posted strong growth of 1%. Finally, the construction sector contracted by 2.2%, taking the level of activity back to levels not seen since the second quarter of 2014.

The economist considers that “the slowdown in UK growth is by no means a disaster, but it will put pressure on the Bank of England to delay the first rate hike, especially as inflation remains in negative territory”. With this in mind, Schroders continues to forecast no change in interest rates until May 2016. “The slowdown in growth presents an even bigger challenge for the Chancellor as he prepares to find a way to implement substantial fiscal tightening over the course of the next few years. Moreover, the success of the introduction of the new living wage hinges on the strength of the economy to absorb the increase in labour costs. If the economy slows further, the government’s policy may cause unemployment to rise once again, making cuts to tax credits even more painful”, Zangana concludes.

Invesco PowerShares Adds Two Low Beta Equal Weight Strategies to Smart Beta Lineup

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Invesco PowerShares Capital Management, LLC, a leading global provider of exchange-traded funds (ETFs), announced the launch of two new ETFs; the PowerShares Russell 1000® Low Beta Equal Weight Portfolio (USLB) and PowerShares FTSE International Low Beta Equal Weight Portfolio (IDLB).

Both USLB and IDLB offer multi-factor concepts, which combine individual factors that may offer excess or differentiated returns. Multi-factor investing centered around low beta may potentially enhance returns while reducing risk and ultimately provide for better risk-adjusted returns.

The new USLB strategy is based on the Russell 1000® Low Beta Equal Weight Index, offering risk-adjusted exposure to domestic equity. USLB’s factor selection focuses on risk management, which centers on low beta, earnings and equal weighting.

The new IDLB strategy also offers risk-adjusted exposure, but is focused on international equity based on the FTSE Developed ex US Low Beta Equal Weight Index.

“We’re excited to be rolling out two new low beta strategies,” said Dan Draper, managing director, global head, Invesco PowerShares. “Both ETFs have potential to reduce risk for investors by following disciplined index methodologies while offering exposure to risk-management factors.”

“We are happy to be able to offer innovative new methodologies on our flagship US domestic and global indexes for investors who seek exposure through exchange-traded funds,” said Ron Bundy, CEO of North America benchmarks for FTSE Russell. “In addition, we are excited to expand on our growing relationship with Invesco PowerShares to provide indexes to underlie their family of exchange-traded funds.”

Bill Gross: Central Banks are “Stubborn, And Reluctant To Adapt To A Significantly Changed Finance Based Economy”

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Bill Gross: los bancos centrales son unos “necios y reacios a adaptarse a una economía que ha cambiado en los últimos años" — Photo by Blatant World . Bill Gross: Central Banks are "Stubborn, And Reluctant To Adapt To A Significantly Changed Finance Based Economy"

In its latest monthly report, the so-called bond king, Bill Gross, warns of the risks that the Zero Bound Yield Curve brings to credit markets.

Gross, who has urged the Federal Reserve to raise rates several times this year, says that the near-zero levels are hurting the real economy and affecting the balance sheets of institutional investors such as pension funds and insurance sector companies because “profit growth is stunted, if short term and long term yields near the zero bound are low and the yield curve inappropriately flat”.

In his opinion, the US government should sell part of its more than $2 trillion in long-term bonds and buy short-term paper to improve the slope of the curve. But he doubts that the Fed will take that route because he believes that “central bank historical models fail to recognize is that over the past 25 years, capitalism has increasingly morphed into a finance dominated as opposed to a goods and service producing system”.

Another recommendation the bond guru makes to central banks is to raise their inflation targets, to say 3%, as the president of the San Francisco Fed, John Williams recently said. However, Gross considered unlikely that central banks of major economies would change their ways because they are “stubborn, and reluctant to adapt to a significantly changed finance based economy.”

You can read the report following this link.

Breaking Down the Proliferation of Exchange Traded Products

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The SEC published this year a myriad questions about the listing, trading, and marketing, especially to retail investors, of “new, novel, or complex” exchange-traded products (ETPs).

An ETP is a derivatively priced security, meaning that it fluctuates with the price of the underlying securities, which trades on a national stock exchange stock exchange. Such ETPs include exchange-traded funds (ETFs), pooled investment vehicles (FlexETPs), and exchange-traded notes (ETNs). ETPs are typically benchmarked to indices, stocks, commodities, or may be actively managed, explains Mario Rivero, Director at ETP providor FlexFunds.

ETPs have grown and evolved enormously since 1992, when the SEC approved the first ETP, the SPDR S&P 500 ETF. Not surprisingly, the SEC also has received more—and more sophisticated—requests by ETP issuers for relief to allow ETPs to be listed on securities exchanges and requests by securities exchanges to establish listing standards for new types of ETPs.

“ETPs have experienced exponential growth since they were introduced. A recently published report by PwC in January 2015 supports this. It states that by 2020, there is likelihood that the global market for exchange traded fund (ETF) would double up to reach around US$5 trillion.” Says Rivero. While the developed markets of US and Europe are likely to witness majority of this increase, the developing nations (especially Latin America) are likely to represent the fastest growing market over the next five years.

Why the tremendous growth?

The most popular ETP is the ETF. These are securities that track an index, commodity or basket of assets. ETFs are used by investors to access emerging markets in a diversified manner. “Although 2015 has had an overall negative impact on the stock market in Latin America, the ETFs of Brazil, Mexico and Chile are expected to continue to increase; possibly not in value, but rather in terms of assets.”

In Latin America there are numerous indexed ETFs and it is becoming increasingly difficult to create new funds that are attractive to local and international investors. Other regulated fund options would include SICAVs and UCITs. However, these options have proven to be costly and lengthy to create, and serve the purpose for conservative investors looking for a highly regulated and restricted investment vehicle. Therefore, the growth in number of available funds should come from another source.

Here the opportunity arises for ETPs that are pooled investment vehicles. These ETPs take the best of both worlds by managing the underlying assets like a fund while trading like a note, and allow a vast variety of underlying assets to be securitized quickly and economically.

Pooled and listed investment vehicles, including FlexETPs, are offering the right alternative for the small and medium size fund market that is expected to yield most of the future ETP market growth. Fund sizes from $20m to $200m are too small for the larger global banks and too large for smaller local banks. Granted, the ETP solution must keep the cost structure in check for these smaller funds.

What is most important is that ETPs provide flexibility within asset management for a vast, and fast, product creation. This will provide institutional and private investors with access to niche or customized investment products. As most developed industries have proven, it is targeted products and services what drives significant growth. It is only to be expected that the same will happen in the ETP global market.

Large, Sophisticated RIAs Require Institutional-Like Sales Approach

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The latest research from global analytics firm Cerulli Associates finds that selling to large, sophisticated registered investment advisors (RIAs) requires an institutional-like sales process compared to traditional retail-focused sales, which are often more relationship-oriented.

“With an institutional-oriented sale, a wholesaler needs to take a more consultative selling approach,” states Kenton Shirk, associate director at Cerulli. “As advisory practices grow in size, their investment decision-making begins to formalize. They begin to adopt a more rigorous and formalized screening, due diligence, and ongoing monitoring. A larger number of individuals are often involved in the process, including research analysts who hold varying degrees of influence on initial sales and holding periods.”

“It is imperative that asset managers consider these influencers in their distribution strategy,” Shirk explains. “Research analysts and chief investment officers (CIOs) can have a substantial influence on an RIA’s investment decisions. Their roles often function as micro-gatekeepers and they are an important center of influence when considering distribution to the independent RIA and dually registered channels.”

“As investment decision-making in practices becomes more formalized and sophisticated, there is a growing need for wholesalers to be technically proficient to support the sales process,” Shirk continues. “Through training and attainment of advanced designations, such as the CIMA or CFA, wholesalers are better equipped to face-off with technically-oriented analysts.”

Cerulli explains that asset managers need to ensure that they are not only training their wholesalers on the technical aspects of the business, but also offering consultative sales training.

GenSpring Names Carlos Carreño Managing Director of Florida East Region

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GenSpring Family Offices has named Carlos Carreño managing director of its Florida East Region. Based in Miami, he will serve families throughout eastern and southeast Florida, including Jupiter, Palm Beach and Miami.

The firm “was founded in Florida more than 25 years ago to serve the diverse needs of ultra-high net worth families,” said Willem Hattink, CEO of GenSpring. “By concentrating on families in their respective regions, our teams will form even stronger relationships with those we serve.”Recently, Jim Brennan was named managing director of the Florida West Region, overseeing Orlando, Tampa Bay and Sarasota family offices.

Prior to joining the firm, Carreño led International Wealth Management for SunTrust Private Wealth Management. In this role, he managed the teams focused on serving the needs of clients and families maintaining a second residency in the United States. Carreño has expertise in domestic and international wealth management, and is proficient in the cross-border regulatory environment, as well as issues impacting non-resident aliens. He has more than 20 years of experience in senior management positions within SunTrust Banks, Kroll and Barclays.

Carreño is a Certified Professional in AML and an active member of the Florida International Bankers Association. He is a graduate of the University of Central Florida.

Investment Europe’s Fund Manager of the Year Awards 2015/16 Winners

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Winners of InvestmentEurope’s Fund Manager of the Year Awards 2015/16 have been announced during a ceremony that formed part of the Fund Selector Forum Italy in Milan that took place on 5 November.

The Awards winners were selected through a quantitative and qualitative process, which also involved from some 10 fund selectors across the region.

The winners are:

Umbrella Category – Equities

Category – Europe

Highly commended – JPM Europe Equity Plus A

Winner – Henderson Gartmore Pan European R EUR Acc

Category – North America

Highly commended – Dodge & Cox Worldwide US Stock Fund EUR

Winner – Fidelity Funds America Fund E-ACC-EUR

Category – Global

Highly commended – JOHCM Global Select A EUR

Winner – Robeco BP Global Premium Equities D EUR

Category – Global Emerging Markets

Highly commended – Nordea 1, Sicav – Stable Emerging Markets Equity Fund

Winner – First State Global Emerging Markets Sustainability A EUR Acc

Category – Frontier

Highly commended – Templeton Frontier Markets

Winner – Amundi Funds Equity MENA – AHE (C)

Category – Single Country

Highly commended – DWS Deutschland

Highly commended – Invesco UK Equity

Winner – DWS Aktien Strategie Deutschland

Category – Asia Pacific

Highly commended – Invesco Pacific Equity Fund

Winner – First State Asia Pacific Sustainability

Category – Japan

Highly commended – UBAM SNAM Japan Equity Value

Winner – GLG Japan CoreAlpha Equity

Umbrella Category – Fixed Income

Category – Corporate Bonds

Highly commended – Vontobel Fund – EUR Corporate Bond Mid Yield B

Winner – Schroder ISF EURO Corporate Bond

Category – High Yield

Highly commended – UBAM Global High Yield Solution

Winner – Nordea 1, Sicav – European High Yield Bond Fund

Category – Global Bonds

Highly commended – Amundi Oblig Internationales EUR P

Winner – Jupiter Dynamic Bond (I EUR Q Inc)

Category – Emerging Market Debt

Highly commended – NN (L) Emerging Markets Debt (Hard Currency) – N Cap EUR (hedged)

Winner – Deutsche Invest I Emerging Markets Corporates

Category – Convertible Bonds

Highly commended – UBS (Lux) Institutional Fund – Global Convertible Bonds

Winner – AXA WF Framlington Global Convertibles F Cap EUR

Category – Money Market/Short Term Bonds

Highly commended – SPB RF Corto Plazo I, FI

Winner – Eurofundlux Cedola 2017 B

Umbrella Category – Multi Asset

Category – Hedge

Highly commended – LO Multiadvisers – Gl Equity Long/Short

Winner – Pictet Alternative Funds – World Equity Hedge – HZ EUR

Category – Real Estate

Highly commended – Petercam Securities Real Estate Europe

Winner – Henderson Horizon Pan European property

Category – Commodity

Highly commended – BGF World Energy

Winner – T. Rowe Price Funds SICAV – Global Natural Resources Equity

Category – ETF

Highly commended – LYXOR DAILY LevDAX UCITS ETF

Winner – Source STOXX Euro 600 Opt Insurance Source UCITS ETF

Category – Specialist Group of the Year

Winner – JO Hambro Capital Management

Category – Investment Group of the Year

Winner – First State Investments

InvestmentEurope also announced its inaugural Personality of the Year Awards, which are to highlight fund selectors identified by their peers as having contributed significantly to the industry.

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“Extended Alpha Fund Allows to Compete in A Race with Other Long Only Funds but with a 60% Bigger Engine”

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"Una estrategia “extended alpha” permite competir en una carrera de fondos long only con un motor un 60% más grande" — Ashish Kochar is a co-fund manager of Threadneedle Global Extended Alpha Fund. Courtesy photo.. "Extended Alpha Fund Allows to Compete in A Race with Other Long Only Funds but with a 60% Bigger Engine"

Ashish Kochar and Neil Robson, co-fund managers of the Threadneedle Global Extended Alpha Fund, explain in this interview with Funds Society the benefits from a 130/30 strategy and the need to generate alfa in a more volatile world.

The ‘Extended Alpha’ concept that names the strategy: In what does it consist exactly?

The easiest way to think about an Extended Alpha fund vs. a typical Long only fund is the analogy of competing in a race with other Long only Funds but with a 60% bigger engine (in this case the 60% extra Gross; upto 30% each from both the Long book and the Short book.)

Extended Alpha Funds or the 130/30 funds take short positions in stocks that are expected to fare badly, while taking long positions in stocks that are expected to outperform the market. The ultimate aim is to create a positive spread between the longs and the shorts. It might sound odd but even if the shorts outperform the market (benchmark) but underperforms the long stock – it still works in creating a positive spread ie alpha creation. They are called 130/30 because approximately 130% of the portfolio is invested in long positions, and 30% in short positions. (Investment managers can short a higher or smaller proportion of the portfolio). These funds have an overall net exposure to the market of approximately 100% and a beta near one, the same as a long-only fund.

Ampliar

How do holding short positions help raising the portfolio’s value?

Shorts positions help the portfolio value in two ways. First, positive alpha creation: You short something and it goes down and you create alpha. This is the bit that is easy to understand. Second, risk management for long book: This is the more interesting bit in that it allows one to own more of what they like in the long book and hedge out part of the risk by shorting a less good company.

In the current market: Is it more important to capture the ‘beta’ or obtaining the ‘alpha’? Why?

Over the past few years strong market performance has provided attractive market (beta) returns to investors. Going forward, we expect lower returns from beta, and therefore the relative contribution and importance of alpha is quite important. In the case of Global Extended Alpha we have been able to generate excess return compounded over the last five years. The more important bit is that these returns have been generated by taking minimal incremental risk.

Do you consider that volatility in the markets will rise?

Yes. We live in an interconnected world so monetary policy changes around the world, particularly the dynamic of potential US rates rising; against slowing emerging market growth presents a major risk. We are concerned about the second-order effects of shifts in currency and commodity prices. Another risk factor is China. The economy is undergoing a long and a difficult transition. This creates new risks and volatility as we saw in the recent Chinese stock market correction.

Which is the current net exposure of the fund and why? Is it time to be cautious or aggressive in the markets?

The Net exposure of the fund is in the middle of the range with beta near one. Equity markets are finely balanced at present and as long as one is confident about growth they look remain attractive relative to bonds. (This is illustrated by the gap between Earnings vs. Bond yields in the chart below.)

Ampliar

Do you believe that there are ‘bubbles’ in some equity markets?

Generally speaking no, we don’t see bubbles within major equity market regions. Some subsectors of the market (and indeed valuations in some private markets (venture capital technology for instance), do look frothy.

Is there value in the global markets? Where would you identify better values for your long and short positions (in sectorial terms, by countries)?

At the present time we believe the global market is relatively fully valued. From a long perspective we favour the US, technology, and consumer sectors.

In your fund’s particular case, you hold conviction bets. How is conviction better than diversification? Is it possible to obtain a diversified portfolio while holding position in few names?

We have a large team, regional team resources, and central research analysts available to us, which means we generate a large number of high conviction ideas within our global opportunity set. Through our investment process we can achieve reasonable diversification by sector and region while only owning stocks that we have strong conviction in. We never own stocks just because they are in our benchmark.

“In 2015 Feminism Is A Business Issue”

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"En 2015 el feminismo se ha transformado en un asunto de negocios" — Barbara Stewa. "In 2015 Feminism Is A Business Issue"

The future looks very bright for women in finance, says Barbara Stewart, CFA. Author of the Book “Rich Thinking 2015: Future of Women& Finance”, and guest speaker at CFA Spain “Future of women and Finance” Forum. Stewart, portfolio manager at Cumberland Private Wealth Management Inc. Toronto. Canada, explains in this interview with Funds Society that the financially confident woman is the number one target market and technology has levelled the playing field for women.

How do you see the future of women in finance, and in the asset management industry in particular?

The future looks very bright for women in finance! Many studies now show that more women = more money and this is a very compelling equation for a still quite traditional investment industry. My research findings are clear that a) feminism makes good business sense, b) the financially confident woman is the number one target market, and c) technology has levelled the playing field for women. Women are huge users of social media and with respect to the asset management industry, – this is beginning to radically change the way we inform our clients about stocks and bonds, the way we find our clients, as well as the way we communicate with our clients.

Women presence is still poor in the investment industry … do you think it will grow over time? Will women take on positions of greater responsibility?

Because of the fact that we will have more and more financially confident women as clients, we will need more sophisticated advisors to work with them. My research has shown that women like to communicate in a language that makes them comfortable and they prefer to invest in causes and concerns that matter to them. The best advisor moving forward? A highly competent male or female advisor who uses a holistic approach and integrates the so-called feminine values of empathy and open communication. Many firms are attempting to attract female advisors because they are a natural fit for this role.

How these developments can benefit the financial and asset management industry?

These developments are great for the industry because once again, it has been proven that more women equals more money. Simply put, women are making more money, they are controlling more money and they are making most of the financial decisions in their families. Our industry needs to do a good job marketing to these financially confident woman – she is the future. If we market to these women properly (using their preferred method of communication and accurately reflecting their values when we suggest various investment alternatives) – we can capitalize on this opportunity to attract significant assets from this critical demographic.

What the advantages of diversity are for companies in the finance and the investment industry?

According to Dr. Ann Cavoukian, one of the ‘smart’ women that I interviewed for my white paper this year (Executive Director, Privacy and Big Data Institute, Ryerson University, Toronto, Canada) – “Feminism is not about saying no to makeup. It is about saying yes to academic, economic and social freedom for both men and women.” In 2015 feminism is a business issue. This type of open communication (through diversity) leads to a better functioning marketplace and a better functioning workplace. Progressive firms that embrace diversity currently have a competitive edge. Firms that “get it” have a But this won’t be the case for much longer. Soon ‘business feminism’ will be normal – just like using computers or using electricity.

How the role of women is as a customer of the financial industry? Is it an important target group? Are women needs different to those of men?

My research has shown that women prefer to learn about and/or hear about financial matters through either informal instruction (via social media/gamification/sharing platforms) or through real-life stories. This means that we need to be ultra-precise when communicating with or marketing to financially confident women. They prefer to invest in causes and concerns that matter to them so our job as advisors is to help them align investment ideas with their values. Most importantly, realize that women aren’t risk averse, they are risk aware. They may take longer to make an investment decision but they will do their homework and take calculated risks. Success with this number one target group will be all about better communication – in the way that they prefer to communicate. And if you make it meaningful to women, they will invest in your product or service, and they will do so with loyalty.

Every time there are more women in major positions: Mrs. Janet Yellen in the FED, Mrs. Christine Lagarde at the IMF… How do you think people perceive them because their women role? Do you think they are judged differently than men?

Actually no. I think there was a time when female role models were being judged differently than men but I don’t think that is still happening. Of course there will always be “unconscious bias” but ultimately it is results that count in the business world and as long as these highly visible women are producing results, well … it is becoming more and more accepted that they are truly top performers and we need them. The beauty of seeing more and more female role models is that it is self-perpetuating – it is becoming more mainstream to view women as effective leaders.

What is the role that women are called to play in the future of the financial industry in Spain, and worldwide?

We need women to act as excellent communicators and to enable the transformation of the industry. We need to restore trust and the best way to do this is through the integration of social media and marketing. One of my interviewees – a behavioural economist, Dr. Gemma Calvert (Founder of Neurosense, Singapore) said – “women may not trust the investment industry but they will trust each other”. The way forward is for smart women to share their positive stories about success in work and life … and inspire other girls and women to think “I can do that too!”

How the investment industry may become a better place for women?

The investment industry is the best place for a woman to work in my opinion. Why? Because you get rewarded for your results. So if you learn how to make money you will have not only financial independence but also the freedom to come and go as you please. And technology has changed everything. Women want to work from anywhere and now they are able to do just that. The role of an investment advisor can accommodate this need for flexibility so that women can continue to live their lives and structure their work schedules around their lives and competing responsibilities/interests.

UBP: “In Our Base Case, A December Hike by The Fed Remains A Possibility”

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Christopher Chu, Asian Markets Analyst at Union Bancaire Privée (UBP), explains the key implications of the Central Banks last discussions:

“For most of 2015, investors have been focused on two key issues: the timing of the Federal Reserve’s first rate hike and the degree to which China’s economy was decelerating. The two events are seen as highly critical given the impact of global borrowing costs and driver for the global economy. During the final week of October, major central banks across both developed and developing countries met, consolidating much of the anticipation generated over the summer.

The Federal Reserve met after both the European Central Bank and the People’s Bank of China announced plans to further loosen monetary policies. Sentiment had correctly guessed a no-hike outcome for the Fed given the data relevant softness in job growth momentum, and the less data relevant decision not to schedule a post meeting press conference.

However, markets were surprised when the FOMC released minutes showing that Fed Chair Yellen had stated that the current economic climate remained conducive for a possible hike in December, reflecting a change in tone following the central bank’s September meeting. The confusion has been further exacerbated as two members of the committee have publically spoken against raising interest rates, arguing that a premature hike could lead to more perilous impact. Subsequently, markets moved lower while the USD strengthened.

The FOMC concluded a day before the closing of China’s 5^th Plenum, a meeting of top leaders that outlines economic and social policies from 2016 to 2020. Similar to the FOMC, markets were combing through details to see if precedence of economic growth had overtaken attention for much needed reform. Beijing had already announced 3Q15 GDP of 6.9% YoY, better than market expectations but still showing a decline from the previous three month period. The PBOC had also cut interest rates earlier in the week, its sixth cut since November of last year, lowering the one year benchmark to 4.33%.

Emphasis on the growth was maintained, as the meeting stated China’s ambition to double its economy from 2010 to 2020, equaling that of the current US GDP. Based on first half of the decade suggests a minimum annual growth rate of 6.5%, which appears doable. The meeting also reemphasized further liberalization of financial markets and advancing its manufacturing services. However, the biggest surprise came when Beijing decided to relax its three-decade old Thomas Maltheus inspired old one-child policy.

The implications of the last days are numerous, though they unfortunately also raise additional questions. Transpiring is evidence of monetary bifurcation for the two largest economies with the US signaling tightening while China preferring loosening. The reality though is both nations recognize the current global environment is rigid and unable to manage aggressive opposing forces.

In our base case, a December hike by the Fed remains a possibility, given the need for the Federal Reserve to reestablish credibility that has been diluted this summer. However, we could see a likely outcome where the Fed tightens by raising the lower band of policy band, from 0.0-0.25% to 0.125-0.25%. In effect, Yellen maintains the bank’s credence of tightening policies in the calendar year of 2015 without materially impacting borrowing costs. This would also allow Yellen to signal a slower tightening process than previous cycles, while a stronger USD acts as monetary tightening mechanism.

We continue to see evidence of China’s economic reforms, including desire to rebalance the economy away from investment led growth. In addition to cutting interest rates, the PBOC also announced the removal of caps on deposit rates, allowing greater competition among the banks and focus loans towards more productive sectors of the economy while also improving incomes for household savings. In our view, the removal of the one-child policy exists as an important social improvement, assuaging concerns over the country’s aging population. However it does little improve productivity. Additionally, China’s traditional preference for males and unhealthy sex ratio of 120 boys to 100 girls is already placing strains on social stability. Economic implications are already limited, given that Beijing had already allowed couples to have two children provided one partner was an old child”.