Standard Life Investments has designed a new tool to help institutional investors manage risk and inform their decisions when investing in global real estate.
The Global Real Estate Implementation Risk tool (GREIR) can help investors find the right markets for their level of risk appetite and understand the expected returns in their global real estate portfolios. It provides an easy method for investors to assess and compare the individual risk ratings of 60 different countries.
GREIR produces a risk score for each country that can be converted into a risk adjustment factor, to achieve a more accurate comparison of the ‘at risk’ portion of expected returns from a global real estate portfolio.
The GREIR tool aggregates three categories of global surveys, representing more than 300 data points, to evaluate and assess economic, political and real estate specific risks.
Indices from all three categories are weighted to produce a risk score of between 1 and 10 for each of the 60 countries included in the rankings. The country with the lowest score is the least risky for real estate investment. The seven components of the score are market size, ease of doing business, competitiveness, innovation, public sector corruption, creditdefault swap spreads, and transparency. The rankings will be updated on a quarterly basis.
Anne Breen, Standard Life Investments, Head of Real Estate Research and Strategy, said: “The level of risk in real estate investment varies enormously from country to country, and the historic measures used for these can mean investors miss changes in risk.
“Cross border investment requires a three dimensional assessment of how the mix of risks affects expected returns. The aim of the GREIR tool is to address the need for a robust framework on which to base decisions about global and regional real estate investment strategies. It provides a more coherent measurement of the domestic risks involved, and helps investors find the right markets for their level of risk appetite.”
Over time the GREIR tool will be expanded to include leading cities within each of the countries listed.
Modest expected returns across a variety of asset classes, sub-par growth and a compressed outlook environment has left investors a challenge of how to maintain income when so many traditional sources of income are drying up.
The fact is that we are undergoing a drought of returns in the traditional “income” products. In order to discuss these, as well as other issues, Pioneer Investments will hold an exclusive due diligence meeting entitled “Embrace New Sources of Return” at the JW Marriott Marquis, Miami, on the 8th of October.
The event will provide attendees with the opportunity to listen to the outlook from several members of the investment team at Pioneer Investments, who will explore beyond the traditional asset classes, conventional asset allocation and risk management, identifying new and attractive solutions for investors who are looking for more flexibility, more sophistication and more active management.
According to the investment team at Pioneer Investments, trends which are changing the market revolve around three very important issues: ageing demographic, public debt and increased regulation.
All of these factors could jeopardize investors’ retirement and savings plans.“There is a need to consider a different way of investing that targets new sources of return, downside mitigation, and volatility management,” highlights the asset management firm.
In 1980, there were 9.8 workers at a global level for every retired person – by 2050, it is expected to drop to four workers per pensioner; and this, along with public deficits, means that in 10 to 20 years, public pension systems will encounter serious difficulties to meet the needs of its citizens.
In the past, such a scenario has led investors to run more risk yet the increase in regulation has made it harder for long-term investors to make riskier choices; and that is why the investment team at Pioneer Investments recommends the use of tools which achieve lower correlation with traditional asset classes. According to the company’s experts, this will help to maintain volatility under control and achieve higher levels of wealth accumulation over time.
To access these alternative sources of return, the industry is recording significant inflows into two types of assets: multi-asset strategies, and liquid alternative strategies.
Liquid alternative mutual funds aim to provide diversification, improve risk-adjusted returns, and may act as shock absorbers during times of market stress. They offer additional flexibility to long-only allocations as managers seek to realise opportunities from non-traditional strategies. Such flexibility allows liquid alternative strategies to seek to capture alternative sources of return while remaining relatively uncorrelated with the global equity and bond markets.
Multi-asset investments can provide different potential sources of return and a more diverse means of allocating risk than through a simple global macro strategy.
According to Pioneer, investors are increasingly inclined to invest in terms of risk-return objectives.“We believe that investors are thinking more about the risk they are willing to run and are increasingly willing to sacrifice some upside in return for better downside protection,” company sources added. Moreover, investors are adding the reliability and stability of the portfolio’s income sources to that equation , a factor that adds to the already known risk-return binomial, and the portfolio’s time horizon.
Amongst other Pioneer Investments Portfolio Managers and Market Specialists who will be attending the “Embrace New Sources of Return” event in Miami this Thursday October 8thAdam MacNulty, will be speaking about Pioneer Funds – Global Multi-Asset Target Income, and about liquid alt strategies as well, such as Pioneer Funds – Absolute Return Multi-Strategy, and Pioneer Funds – Absolute Return Multi-Strategy Growth. Thomas Swaney will also speak on Alternative Solutions – specifically, Pioneer Funds – Long / Short Opportunistic Credit.
“If you can free up some of your assets to work harder for you, if you can accurately measure your risk tolerance and if you have trust in your asset manager to be more active in your investments, then it is our opinion that you really could have the potential to generate greater returns in this environment,” concludes the firm.
The Luxembourg Stock Exchange in cooperation with the Association of the Luxembourg Fund Industry (ALFI) has announced the publication of a compendium of Luxembourg laws and regulations on investment funds. The compendium is currently published in English, French and German and made up of two separate publications in each language.
The first publication covers undertakings for collective investment in transferable securities (UCITS) established under Luxembourg law and contains the amended Law of 17 December 2010 on undertakings for collective investment as well as the main regulatory texts relating thereto.
The second publication covers alternative investment funds (AIFs) established under Luxembourg law and other investment vehicles which are neither UCITS nor AIFs. It contains the amended Law of 12 July 2013 on alternative investment fund managers (AIFM), the amended Law of 17 December 2010 on undertakings for collective investment, the amended Law of 13 February 2007 on specialized investment funds, the amended Law of 15 June 2004 on the investment company in risk capital as well as the main regulatory texts relating thereto.
Denise Voss, Chairman of ALFI, comments:“The publication of such a reference booklet was long overdue. The number of laws, regulations and circulars impacting investment funds is steadily increasing. Fund professionals now have access to a single source book for each particular type of fund, containing all main legal texts and accompanying circulars. I am convinced that these publications will prove extremely useful to the international investment fund community”.
Robert Scharfe, Chief Executive Officer of the Luxembourg Stock Exchange, adds:“Investment funds are the second largest segment on the Luxembourg Stock Exchange, with more than 6,500 listings. As an international exchange serving a global base, these two publications respond to a clear need from the fund industry and provide an essential reference”.
These two publications of the main legal and regulatory texts were produced by the two Luxembourg law firms, Arendt & Medernach and Elvinger, Hoss & Prussen, who have actively cooperated to select and compile the legal and regulatory texts that are relevant for the different types of investment vehicles concerned. These two law firms have also prepared the English and German translations.
Of all challenges facing asset managers -compliance, competition, volatile markets- Cerulli Associatesbelieves that effective communication is the toughest. Managers are keen to restore trust and confidence in an industry tainted by the 2008 financial crisis by targeting a variety of audiences with thought leadership initiatives -sharing knowledge, developing sustained rapport- via multiple channels, finds a new report from the firm entitled European Sales and Markeging Organizations 2015.
Managers said hat they want to offer fresh perspectives and solutions to help the wider audience -some of it new to investments- which they hope will give them an edge as competition and regulatory pressures intensify.
A total of 94% of European asset managers said that they use thought leadership initiatives to target institutional investors. And almost two-thirds of managers use thought leadership strategies to develop a rapport with consultants, while 55.6% use such initiatives to target private banks and wealth managers. And about a third of managers surveyed are focusing on platforms. A further 22.2% of managers are targeting independent financial advisors.
But thought leadership is not about the hard sell, say managers. They want their content to be informative and educational and a softer, more discerning part of the marketing machine.
“The written word alone is not enough and the variety of message is much wider, quirkier, and colorful. It is also sophisticated and fast moving: videos and podcasts are used as a matter of course,” says Barbara Wall, European research director at Cerulli. “Training for thought leaders has also evolved as fund managers go to greater lengths to develop talent, either through third-party experts or by developing internal know-how,” she adds.
Financial marketers spend between 10% and 20% of their total budget on their content marketing in the United Kingdom alone. And Cerulli’s interviewees have also allocated logistics and time to establishing internal systems while also involving third-party expertise, such as professional copywriters and respected academics. And in return for this commitment, fund managers want effective two-way communication.
“Feedback -any reaction, in fact- is meaningful because it shows that the message that caused it was incisive and engaging enough to warrant a response,”says Angelos Gousios, senior analyst at Cerulli. “This shows that the industry is growing more open and democratic, moving away from the one-sided information mode that has characterized it for so long,” he adds.
Meanwhile, managers are developing ways to measure the success of thought leadership initiatives, including external speaking requests and press coverage. A total of 80% of managers surveyed by Cerulli measure the impact of thought leadership campaigns by counting the hits on their digital and social media sites.
Investec gathers 250 investors from 23 countries in London for its 2015 Global Insights Event. Investec AM Global Insights 2015: Investors Must not Turn Their Back on Emerging Markets
At the Investec Global Insight Conference 2015 being held in London last month, Henrik du Toit, CEO of Investec Asset Management, outlined the company’s vision for the environment in which we currently operate by stating that investors must stop being locally biased to become true global investors.
The South African firm’s assets are a good example of this approach. With offices in Cape Town, London, Hong Kong, and Singapore, and US$120bn in assets under management, they are the only asset management company originating in an emerging country, which plays in the big fund managers’ league. Moreover, its assets under management are equally divided between developed and emerging markets.
Richard Garland, Managing Director for the Global Advisory business at Investec AM, pointed out that the firm has seven investment teams with unique investment philosophies, offering a varied range of products, with a dynamic and business oriented corporate culture which is fully aligned with the needs of their clients.
Proof of this is that 15% of the company is held by the company’s key employees, including all senior professionals involved in the investment process. In addition, portfolio managers invest a significant amount in the funds they manage, to ensure that their goals are fully aligned with the other investors in the fund.
Garland acted as Master of Ceremonies on the conference; Du Toit, the company’s CEO, gave a broad overview on key points of the business, to make way for the speech by James Hand, co-director of the 4Factor Equity team, and a presentation by Michael Power, strategist for the firm, on the “Collision of Two Worlds,” developed and emerging, and its impact on investment portfolios.
Undisputed Protagonists: Emerging markets
Du Toit claimed that, with the arrival of new economies into the global arena, we have embarked on a journey in which the world is changing. He stated that one cannot be left out of the process of wealth creation that is occurring in emerging markets, and that although right now their role is under question, their protagonism is indisputable in the long term. For the company’s CEO, the best advice is to invest with a global focus rather than a country-by-country one.
Power, strategist for the firm, said that deflation is the main issue that any investment portfolio has to deal with. Overheating in the developed world is being offset by the deflationary influence from the emerging markets, which are able to produce at much lower costs due to their specialization and the low cost of labor. Thus, according to Power, the price deflation process suffered by Japan since the nineties is now also affecting the United States, and Europe even more so, as they are also facing a serious demographic problem, “Europe needs more babies,” he said. In fact, Asia is taking the jobs of the Western world, and the institutions in developed countries have reacted by cutting rates, encouraging credit, and increasing spending.
In this environment, Power urges investors not to turn their backs on the economies that are generating wealth. If Korea and Taiwan stole the limelight from Japan in the nineties, creating its problem of deflation, this century China has taken over, and now “we can even envision that ASEAN countries could be replacing China in this process” Power says. In short, and in the words of this strategist, “the white man has lost his job in favor of an Asian woman,” a difficult reality to digest.
What to do in this environment? Power recommended to those investors and advisers present, to prepare portfolios for capital preservation in a deflationary environment, which is going to continue. “The type of high-quality companies in which the Investec Global Franchise strategy invests are a good choice; also invest in bonds and cash, making sure it is in the appropriate currency; equities and Asian fixed income are also interesting, as well as certain private sectors in the United States, such as pharmaceuticals.”
Asian Equities and Value Stocks are Cheap
Several 4Factor Investec investment team members, as well as portfolio managers for the Asian Equities and Fixed Income teams, gave their views on various sectors and investment styles in two panels. One of these concentrated on developed markets and the other one on China. One of the conclusions in relation to developed markets is that even though there is a somewhat more attractive valuation in value stocks, perhaps it is too soon to embark into overweighting this asset class. However, the quality factor, although in higher ratios, is offering opportunities in companies with high generation of free cash flows which justify their prices. “Those stocks with free cash flow yields higher than 5.5% which grow by around 8% annually, mark the path to success,” Clyde Rossouw, co-director of the Quality Factor, pointed out.
James Hand, co-director of the 4Factor Equity team, analyzed the situation by markets, styles, and sectors, concluding that looking at the valuations, the picture shows that emerging markets, Asia, and value stocks are cheap, while by sector, valuations are low in cyclicals versus defensives, “but at the moment, you have to be willing to buy in these markets, which are cheaper, without any evidence that the fundamentals are improving, so unfortunately there is no clear answer” .
The event counted with a stellar presentation by Francois Pienaar, former captain of South Africa’s national rugby team in 1995, year when the team won the World Cup. Pienaar, played by Matt Dillon in Invictus, the film production directed by Clint Eastwood, shared with the audience his sporting and human experience when leading his team to victory at a time when the country was taking its first steps towards democracy. “My main criticism of the film is that in it, I had a disproportionate leading role, the victory in the Rugby World Cup was the work of the whole team,” Pienaar assured. He also shared the inspiration which the team always received from Nelson Mandela, who clearly understood from the onset the power which sport has to unite a people who at that time were divided. “From him, I obtained the motivation to make the world a better place, starting from your own home, your street, your neighborhood, your circle of friends, your city, and your country,” he concluded.
Mixed asset mutual funds drove the bulk of long-term net inflows from European investors through July 31, 2015, according to new data released in two reports from Broadridge Financial Solutions, Inc.
The European Fund Market Mid-Year Review and July 2015 FundFlash Monthly Snapshot reports both detail continued momentum in mixed asset products – those that invest in equities, bonds, cash and other funds – and strengthening equity investments following June’s market correction. The reports include commentary and insight based upon a new partnership between Broadridge and MackayWilliams LLP, a leading mutual fund market analysis and research company firm for the domestic pan-European and cross-border fund markets.
Additional findings from Broadridge’s reports include:
Investors pumped EUR 55 billion into European investment funds including EUR 31 billion into long term funds in July
Mixed asset products accounted for 55% (EUR 124 billion) of total inflows in the first half and 23% (EUR 7 billion) in July
The top three markets by estimate net sales in July were Italy, Germany, and the United Kingdom
The top fund firms by sales in July were BlackRock, DeAWM, GAM Holding, Intesa and Vanguard
“It’s been a challenging year for asset managers in Europe with some periods of intense market volatility and increasing competition coming from the banks,” said Diana Mackay, chief executive officer of MackayWilliams, “But low interest rates continue to drive flows into retail funds and mixed asset funds, in particular, are having a blockbuster year.”
“Our new partnership with MackayWilliams follows our recent acquisition of the Fiduciary Services and Competitive Intelligence unit from Thomson Reuters’ Lipper division,” said Frank Polefrone, senior vice president of Broadridge’s data and analytics business. “Together, these investments demonstrate our ongoing commitment to providing our clients with innovative data, analytics and insights to enhance their sales efforts.”
New research from global analytics firm Cerulli Associates finds that institutional sales teams are adding personnel to their sales and service teams in the United States.
“We surveyed institutional sales managers about the types of changes they are making to their sales and service teams, and found, regardless of firm size, the majority of asset managers are focused on adding headcount,” states Alexi Maravel, associate director at Cerulli. “They plan to add headcount to nearly all groups, except relationship management, where headcount will remain the same.”
“Some institutional asset managers deliberately increase its client service and portfolio specialist headcount, because after the business is won, these relationships are immediately taken over by client service personnel,” Maravel explains.
“Institutional sales and service teams are typically structured to support portfolio management so that the firm’s investment personnel spend minimal time traveling and can focus on managing assets.”
“Managers that we spoke with also expressed interest in hiring junior associates for their sales, consultant relations, and client service teams,” Maravel continues. “Individuals in these roles are tasked with the more operational aspects of sales and service departments, such as intelligence and data-gathering, finding opportunities in territories, and assisting with creating slide decks that will be presented to clients and prospects.”
Foto: toastyken, Flickr, Creative Commons. Los family offices se vuelven globales
Morgan Stanley Investment Management has announced that MS INVF Global Brands has re-opened for subscriptions after capacity became available in the strategy.
The investment thesis behind Global Brands has remained the same since its inception, providing a concentrated portfolio of high quality companies with the aim of compounding investors’ wealth over the long term, whilst striving to preserve capital in down markets.
“We have long taken a conservative approach to capacity management and will continue to do so to protect investment returns,” said Managing Director and Head of the International Equity team, William Lock, which manages MSIM’s Global Brands and Global Quality funds.
Bruno Paulson, Managing Director and Senior Portfolio Manager, continued “The fund is benchmark agnostic and our goal is to grow clients’ capital and not lose it. The economic robustness of quality companies helps to deliver returns when they are needed most – during challenging market conditions.”
Morgan Stanley is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in more than 43 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals.
In the latest edition of Global Horizons, “A Brave New World for Fond Markets” Jeremy Lawson and Sebastian Mackay -Standard Life Investments- look at whether bond markets are pricing in a great stagnation and how yields are likely to evolve through the rest of the business cycle.
“These are highly unusual times in the world of fixed income. The factors weighing on bond yields are numerous, complex and in some cases, unprecedented.” Said Jeremy Lawson, Chief Economist, Standard Life Investments
“Aftershocks of the financial crisis are still being felt, seven years after Lehman Brothers collapsed. Our analysis shows that the scarring from the crisis and prolonged private sector deleveraging has raised desired savings, weighing on domestic demand and inflation. Weakness in domestic demand in advanced economies has been amplified by policy mistakes and this has depressed labor markets, discouraged firms from investing, and held down inflation. Productivity growth, which had been in decline even before the crisis, has weakened further, underpinned by the drought in private and public capital spending.”
“Both by accident and design, central banks and regulators have been pursuing policies that lower real interest rates and term premia, enhancing the demand for all income yielding assets. Central banks have been forced to keep short term interest rates at or even below the zero lower bound, and to put in place unconventional policy measures aimed at suppressing real interest rates along the entire yield curve.”
Jeremy Lawson, adds “Looking ahead and taking account of these special factors – why should the market change its mind and begin to anticipate higher long term interest rates? We examine the potential triggers for long-term bond yields to shift in the US. If recoveries in the advanced economies become more self-sustaining and if emerging market economic and financial conditions do not deteriorate further, inflation expectations could pick up. The Fed should be willing to accommodate some increase in real interest rates. Investors might also demand more compensation for holding long-term interest rate risk.
“We conclude that it is unlikely that the long term interest rates will return to their pre-crisis norms. Our research suggests that the benchmark US 10 year government bond yield will peak at 3 to 4% during the current business cycle. This would be above today’s levels but well below the peak of previous business cycles.”
Victoria Mio, co- chief investment officer in Asia Pacific at Robeco.. Robeco, about China: "Some Investors Did Leave The Market, Providing A Good Entry Point for Long Term Investors"
Victoria Mio, co- chief investment officer in Asia Pacific at Robeco and Robeco Chinese Equites’ fund manager, explains in this interview with Funds Society her outlook for the Chinese economy and markets and the impact for the global economy.
How would you explain the volatility that the Chinese stock markets have experienced in recent weeks?
For the offshore Chinese equities listed in Hong Kong and the US, the recent volatility is due to the following factors: continued lack of sign for macroeconomic condition improvement in China; changing of Chinese currency CNY pricing mechanism and 3% one-off CNY depreciation; lack of upside surprise from the 1H2015 corporate earnings result season in August; expectation of interest rate hike in the US causing funds outflows from global emerging markets, including China. For the domestic A share markets, there is a Chinese specific condition: unwinding of margin finance. At the peak, margin financing through the official channels stood at CNY 2.3 trn in mid Jun, and dropped to less than CNY 0.9 trn.
Will the current Chinese government measures be enough? To what extent the Chinese authorities have room to boost the markets?
China government has recently introduced new stimulus as debt-swap (CNY 3.2 trn debt-swap program for maturing short-term LGFV debts to be converted into long-term local government bonds), local government projects (boosting the capital adequacy ratios of China Development Bank and Export-Import Bank of China, and issue policy bonds to support local government projects), infrastructure (support construction in 5 areas: agriculture, urban infrastructure, environment protection, public housing and high-end manufacturing & telecom), property (PBOC cut the down-payment requirement for second homes to 40% from 60%. This will likely lead to an improvement in property investment in 4Q15), export (the State Council pledged on 26 August 2015 to support China’s export by cutting levies on exported goods, increase the transparency of port and customs fees, etc.) and consumption (the government also cut the RRR for auto loan by 300bps to support auto finance).
These stimuli may not be enough to stop the deceleration in growth, but they will reduce the downside. We expect that the Chinese central bank will continue to cut interest rate or RRR in Oct this year, and will continue the monetary easing policy next year. We also expect the government to do more fiscal spending to boost growth in the coming months, particularly related to the 13th Five Year Plan (covering 2016-2020). The initial plan is likely to be announced in October 2015 and finalized in March 2016.
Is there anything you may find positive about such markets correction?
Valuation becomes extremely attractive now. Some investors did leave the market, providing a good entry point for long term investors.
Do you see room for further declines in China’s markets?
Given the extreme bearishness in the market, and record low valuation, the downside is limited. The risk is to the upside in the next 3-6 months.
At this moment, what is your strategy: taking the opportunity to buy low or selling because of high volatility?
We remain overweight China within our APxJ/EM coverage universe. We are selective with stock ideas, and prefer sectors/stock names with healthy earnings growth trajectory, and potentially have higher US$ or equivalent revenue exposure while its cost base is more RMB denominated. Such sectors/companies will benefit under the RMB depreciation scenario.
To what extent this crisis will impact in the developed world, especially Europe and the US? Do you think the situation can be spread around, as we saw in August?
Due to capital control in China, the correction in China A share markets will have little impact on global markets, except the Hong Kong equity market, through the Shanghai-Hong Kong Stock Connect.
The net impact of the change in the RMB currency management approach on the global economy is dependent on whether policy-makers also take up easing measures in a way that stabilizes growth in China. A currency move, just by itself, will lead to tightening financial conditions elsewhere in the world (by way of appreciation of other economies’ trade-weighted indices) and could prolong the impact of disinflationary forces on the global economy. We expect this impact to be felt most materially in the Asia ex Japan region and also in the US (given the close trade linkages between China and these economies).
What about the contagion of other markets in Asia? And in Latin America?
From macro perspective, the Asia ex Japan region is highly exposed to the impact of China’s slowdown, as China has emerged as a key source of end demand over the past years. Within the region, Korean, Taiwan and Singapore would be the most affected via the direct trade channel, while Indonesia and Malaysia would be affected via the commodity price channel, owing to their status as the net commodity exporters in the region.
Latin America is less directly exposed to China’s end demand. But with the majority of tis exports basket commodity related, a growth slowdown in China would affect the region via weaker commodity prices and a negative terms of trade impact. Domestic demand could be further affected via weaker consumer purchasing power and reduced attractiveness of commodity related investment. Government spending could be constrained by weaker commodity tax revenues.
From a currency market perspective, the adjustment of the fixing mechanism of the CNY may have a potential impact on other Asia currencies, as the resultant devaluation has resulted in the Asian currencies trading weaker too.
Do you think this turmoil may lead the Fed to delay, even more, the interest rates hikes?
Specifically, for the Fed, China’s move complicates one of the three criteria – a leveling out in the trade-weighted dollar – that the Fed had laid out earlier this that, if met, would give it the confidence to raise the target rate this year. Robeco holds the view that the Fed will start its first rate hike in December 2015.
What impact will the new China have in global growth, commodity prices, and in general, in the world economy?
Unlike the “old China” sectors that are more investment + export driven and more energy intensive, the “new China” is more consumption driven and less energy intensive. If the relatively faster growth in “new China” helps to prevent a major slowdown in China’s growth, in general, China is likely to continue contribute to world GDP growth by a significant share, though commodities prices are unlikely find a meaningful lift from this.
Will there be soft or hard landing?
We expect China to have a gradual pace of adjustment to address the challenges of managing the disinflationary pressure and high debt level. This gradualism approach means that the disinflationary pressure could persist for longer as we believe that the magnitude of excess capacity in China remains large during this slow adjustment process.
As policy makers continue to adopt gradual adjustment, we believe investment growth will continue to slow in an environment of relatively high real borrowing cost trend, particularly for the industrial corporate sector. Moreover, moderation in corporate revenue and nominal industrial growth is resulting in the corporate sector slowing wage growth, which in turn is likely to weigh on private consumption growth. Hence, we expect GDP growth to slow to 6.8% YoY in 2016.
We have seen the slower GDP growth mainly weighed by industrial sectors. The current weakness in growth mainly reflected the difficulties in industrial economy on the back of deceleration in investment growth and systematically weaker external demand. However, services sectors growth continues to outperform the industrial sectors. The services sectors – which represented 48.1% of GDP in 2014 (vs. 44.2% in 2010) – have been outperforming the overall GDP growth. Tertiary sectors growth was 8.4% YoY in 1H15 (vs. 7.8% YoY in 2014), partially offsetting the slower growth in secondary sectors (6.1% YoY in 1H2015 vs. 7.3% YoY in 2014). The strength in the services sectors is reflected in the relatively higher reading of non-manufacturing PMI at around 53-54, well above manufacturing PMI which is hovering at around or slightly below 50.
