As you can see in the performance chart below, the AI capex boom has been by far the dominant driver of returns this year.

Source: NS Partners and LSEG Datastream.

The rally in emerging markets this year has been so narrow that less than 25% of stocks have outperformed the benchmark.

MSCI EM – Percentage of stocks outperforming the index (rolling 12-month)

Source: Jefferies Equity Research, June 2026.

South Korea’s outperformance has been driven to an extreme by local retail participation in leveraged/unleveraged single-stock ETFs.

Fund assets of 16 single-stock leveraged/inverse ETFs linked to Hynix and Samsung Electronics

Source: Jefferies Equity Research, July 2026.

We are now seeing some profit taking and de-leveraging in overcrowded areas, and the correction from the highs among semiconductor stocks has been sharp, with the KOSPI correcting over -30% from its June peak.

Despite hitting oversold levels, our inclination is not to catch the falling knife and double down, but rather wait for signs of consolidation in tech while looking for opportunities in EM laggards outside North Asia.

The positioning data below from EPFR illustrates how many markets outside of Taiwan and South Korea have been abandoned by investors and may offer up some attractive opportunities.
 

The dominance of South Korea and Taiwan market performance over the last 12 months is reflected in significantly lighter positioning elsewhere

South Korea: 9.2% → 21.7%, OW vs benchmark went from +1.6pp to +5.3pp

Taiwan: 15.9% → 23.3%, active weight rose sharply, yet Taiwan active remains underweight vs benchmark.  UW widened to −3.3pp from −2.6pp

China: 23.1% → 18.0%, cut heavily and UW vs benchmark narrowed from −2.2pp to −0.8pp

India weighting has nearly halved from the peak

India the “AI loser”

From the charts above, India stands out as the biggest victim of the enthusiasm for North Asian tech stocks. Just a couple of years ago India was one of the standout equity markets over a period of decades. Now Indian stocks cannot seem to catch a break.

Since the end of 2024, India’s weighting in the MSCI EM benchmark has fallen from nearly 20% to 9% today, as Taiwan and South Korea have surged from a quarter to almost half the benchmark. Last year, Indian equities posted their worst year relative to Asian equities since the 1990s.

Source: Bloomberg

Broken story?

In the lead up to the market peak in 2024, India’s investment narrative was the ideal EM structural growth story:

• Continental-sized economy enjoying healthy growth.
• Favourable demographics, the largest working age population accounting for around 69% of the population (United Nations Population Prospects 2025).
• High levels of education, producing over 2.5 million STEM graduates annually.
• Over a decade of stable politics under Prime Minister Modi.

Indeed, it was this final point that we were most excited about, as a decade or more of stable politics and positive incremental reforms were beginning to bear fruit. Our conviction for India’s bright prospects rest on an understanding that institutional quality is a crucial factor for unlocking sustained economic growth and moving up the development ladder.

Institutional quality can be the difference between a country like Argentina – which, at the beginning of the 20th century was one of the richest countries on the planet, to where it is today with high inflation and political dysfunction (although, under President Milei, Argentina is taking its first steps to resolve this) – and Singapore, one of the poorest countries on earth 50 years ago, before taking off in an era of rapid development to be one of the richest countries in the world today.

Is the market signalling that something is broken in India?
 

Incremental reform

Modi’s tenure has brought with it initiatives including bankruptcy law reform, sanitation universalisation, electrification of rural India, a national goods and services tax, demonetisation and digital payments infrastructure. Any one of these initiatives may seem relatively trivial in isolation. However, it is the compounding effect of these incremental steps that can create a virtuous circle that unlocks the next upward shift in wealth.

For a country the size of India, that progress will see several hundred million Indians join the formal economy and accumulate wealth, which can in turn present a host of opportunities for investors with the framework to harness these structural tailwinds.

We think this story remains intact.

GDP growth among the best in EM

Source: Berstein, June 2026

Multiple headwinds

Foreign investors have abandoned Indian equities, having designated the market an “AI loser” due the disruption of its five-million-strong IT services sector. Higher energy prices on the back of the US-Iran conflict have been an added headwind.

Annual foreign net buying of Indian equities

Source: Jefferies Equity Research, June 2026

After a decade of strong performance, India was an obvious source of funds to add to South Korea and Taiwan as the boom in hyperscaler capex saw the earnings of tech hardware companies in those countries skyrocket.

The foreign exodus has come as earnings growth for the market has fallen below the highs of 2022–2024 (over 30%). It appears to have troughed at 5.8% in 2025 and is forecast to accelerate into the mid-teens by 2027.
 

Lots of paper coming out

A stream of IPOs coming to market soaking up liquidity has been an added drag. In the financial year ending March 2026, an all-time high of 266 IPOs were filed with SEBI, and since March we have seen another 39 filings in three months suggesting these headwinds will persist.

Source: HSBC India Equities, July 2026.

While this is a short-term headwind, these listing are the makings of a far deeper and more diverse opportunity set for investors in India.
 

Still not cheap

On a price-to-earnings basis MSCI India trades one standard deviation above its 20-year average premium to MSCI EM of 1.5x, although on a price to book basis it looks reasonable.

MSCI India Trailing Price to Book

Source: Bloomberg.

There are pockets of value and positive earnings revisions across financial services, banks, real estate, software, healthcare and retail staples, but this is beside the bigger structural point. In India we have the institutional reform story fuelling sustained economic and corporate earnings growth, and a deep opportunity set of companies with high-quality management teams.

Key mantra: be careful relying on mean reversion tables when there is positive structural change taking place

Alongside the reforms mentioned above, the development of India’s domestic pension and mutual fund industry is a powerful force which can drive stock market re-rating. Just as we saw in places like Australia and Chile, the creation of a structural, non-cyclical source of demand for financial assets can create powerful feedback loops. Below is a rough schematic:

Jefferies Head of Global Equity Strategy Chris Wood has been one of the leading strategists emphasising the importance of these pension and mutual fund flows. His charts below illustrate that while foreigners have run for the exits, domestic demand for Indian equities remains robust.

Monthly net inflows into domestic equity mutual funds

Note: Exclude arbitrage funds. Data up to May 2026.
Source: AMFI, Jefferies

Estimated National Pension System (NPS) flows into equities

Source: Jefferies Equity Research, June 2026.

The AI earnings boom in Korea and Taiwan has captivated investors over the past 12 months. While we have held a healthy overweight to the theme for several years, we maintain a wide aperture in our search for positive structural stories across a diverse opportunity set in emerging markets. Despite being distinctly out of favour, India’s rise up the development ladder remains one of the most exciting opportunities in the asset class.

Next month we will publish a few examples of some brilliant companies in India capitalising on these structural trends, and where stock market malaise has presented us with some attractive entry points.

The post Taking stock of EM performance appeared first on Groupe financier Connor, Clark & Lunn ltée.

As you can see in the performance chart below, the AI capex boom has been by far the dominant driver of returns this year.

Source: NS Partners and LSEG Datastream.

The rally in emerging markets this year has been so narrow that less than 25% of stocks have outperformed the benchmark.

MSCI EM – Percentage of stocks outperforming the index (rolling 12-month)

Source: Jefferies Equity Research, June 2026.

South Korea’s outperformance has been driven to an extreme by local retail participation in leveraged/unleveraged single-stock ETFs.

Fund assets of 16 single-stock leveraged/inverse ETFs linked to Hynix and Samsung Electronics

Source: Jefferies Equity Research, July 2026.

We are now seeing some profit taking and de-leveraging in overcrowded areas, and the correction from the highs among semiconductor stocks has been sharp, with the KOSPI correcting over -30% from its June peak.

Despite hitting oversold levels, our inclination is not to catch the falling knife and double down, but rather wait for signs of consolidation in tech while looking for opportunities in EM laggards outside North Asia.

The positioning data below from EPFR illustrates how many markets outside of Taiwan and South Korea have been abandoned by investors and may offer up some attractive opportunities.
 

The dominance of South Korea and Taiwan market performance over the last 12 months is reflected in significantly lighter positioning elsewhere

South Korea: 9.2% → 21.7%, OW vs benchmark went from +1.6pp to +5.3pp

Taiwan: 15.9% → 23.3%, active weight rose sharply, yet Taiwan active remains underweight vs benchmark.  UW widened to −3.3pp from −2.6pp

China: 23.1% → 18.0%, cut heavily and UW vs benchmark narrowed from −2.2pp to −0.8pp

India weighting has nearly halved from the peak

India the “AI loser”

From the charts above, India stands out as the biggest victim of the enthusiasm for North Asian tech stocks. Just a couple of years ago India was one of the standout equity markets over a period of decades. Now Indian stocks cannot seem to catch a break.

Since the end of 2024, India’s weighting in the MSCI EM benchmark has fallen from nearly 20% to 9% today, as Taiwan and South Korea have surged from a quarter to almost half the benchmark. Last year, Indian equities posted their worst year relative to Asian equities since the 1990s.

Source: Bloomberg

Broken story?

In the lead up to the market peak in 2024, India’s investment narrative was the ideal EM structural growth story:

• Continental-sized economy enjoying healthy growth.
• Favourable demographics, the largest working age population accounting for around 69% of the population (United Nations Population Prospects 2025).
• High levels of education, producing over 2.5 million STEM graduates annually.
• Over a decade of stable politics under Prime Minister Modi.

Indeed, it was this final point that we were most excited about, as a decade or more of stable politics and positive incremental reforms were beginning to bear fruit. Our conviction for India’s bright prospects rest on an understanding that institutional quality is a crucial factor for unlocking sustained economic growth and moving up the development ladder.

Institutional quality can be the difference between a country like Argentina – which, at the beginning of the 20th century was one of the richest countries on the planet, to where it is today with high inflation and political dysfunction (although, under President Milei, Argentina is taking its first steps to resolve this) – and Singapore, one of the poorest countries on earth 50 years ago, before taking off in an era of rapid development to be one of the richest countries in the world today.

Is the market signalling that something is broken in India?
 

Incremental reform

Modi’s tenure has brought with it initiatives including bankruptcy law reform, sanitation universalisation, electrification of rural India, a national goods and services tax, demonetisation and digital payments infrastructure. Any one of these initiatives may seem relatively trivial in isolation. However, it is the compounding effect of these incremental steps that can create a virtuous circle that unlocks the next upward shift in wealth.

For a country the size of India, that progress will see several hundred million Indians join the formal economy and accumulate wealth, which can in turn present a host of opportunities for investors with the framework to harness these structural tailwinds.

We think this story remains intact.

GDP growth among the best in EM

Source: Berstein, June 2026

Multiple headwinds

Foreign investors have abandoned Indian equities, having designated the market an “AI loser” due the disruption of its five-million-strong IT services sector. Higher energy prices on the back of the US-Iran conflict have been an added headwind.

Annual foreign net buying of Indian equities

Source: Jefferies Equity Research, June 2026

After a decade of strong performance, India was an obvious source of funds to add to South Korea and Taiwan as the boom in hyperscaler capex saw the earnings of tech hardware companies in those countries skyrocket.

The foreign exodus has come as earnings growth for the market has fallen below the highs of 2022–2024 (over 30%). It appears to have troughed at 5.8% in 2025 and is forecast to accelerate into the mid-teens by 2027.
 

Lots of paper coming out

A stream of IPOs coming to market soaking up liquidity has been an added drag. In the financial year ending March 2026, an all-time high of 266 IPOs were filed with SEBI, and since March we have seen another 39 filings in three months suggesting these headwinds will persist.

Source: HSBC India Equities, July 2026.

While this is a short-term headwind, these listing are the makings of a far deeper and more diverse opportunity set for investors in India.
 

Still not cheap

On a price-to-earnings basis MSCI India trades one standard deviation above its 20-year average premium to MSCI EM of 1.5x, although on a price to book basis it looks reasonable.

MSCI India Trailing Price to Book

Source: Bloomberg.

There are pockets of value and positive earnings revisions across financial services, banks, real estate, software, healthcare and retail staples, but this is beside the bigger structural point. In India we have the institutional reform story fuelling sustained economic and corporate earnings growth, and a deep opportunity set of companies with high-quality management teams.

Key mantra: be careful relying on mean reversion tables when there is positive structural change taking place

Alongside the reforms mentioned above, the development of India’s domestic pension and mutual fund industry is a powerful force which can drive stock market re-rating. Just as we saw in places like Australia and Chile, the creation of a structural, non-cyclical source of demand for financial assets can create powerful feedback loops. Below is a rough schematic:

Jefferies Head of Global Equity Strategy Chris Wood has been one of the leading strategists emphasising the importance of these pension and mutual fund flows. His charts below illustrate that while foreigners have run for the exits, domestic demand for Indian equities remains robust.

Monthly net inflows into domestic equity mutual funds

Note: Exclude arbitrage funds. Data up to May 2026.
Source: AMFI, Jefferies

Estimated National Pension System (NPS) flows into equities

Source: Jefferies Equity Research, June 2026.

The AI earnings boom in Korea and Taiwan has captivated investors over the past 12 months. While we have held a healthy overweight to the theme for several years, we maintain a wide aperture in our search for positive structural stories across a diverse opportunity set in emerging markets. Despite being distinctly out of favour, India’s rise up the development ladder remains one of the most exciting opportunities in the asset class.

Next month we will publish a few examples of some brilliant companies in India capitalising on these structural trends, and where stock market malaise has presented us with some attractive entry points.

The post Taking stock of EM performance appeared first on Groupe financier Connor, Clark & Lunn ltée.

Ever thought of opening your own escape room or theme park?

Or maybe you’re thinking of contacting SpaceX to launch a satellite of your own?

It could be that you simply have a piece of art or expensive jewelry at home.

What if you’re trying to make it as an influencer where your online reputation is your most important asset?

To address all the above, and more, there is a niche segment within insurance called “specialty insurance.” As the name would suggest, specialty insurers attempt to cover risks that are too unusual, complex or volatile for standard insurers to price correctly. Examples of specialty insurance coverage include:

• cyber insurance,
• marine, aviation and energy risks,
• kidnap and ransom,
• directors’ and officers’ (D&O) risk, and
• niche businesses or properties.

Standard versus specialty insurance: What’s the difference?

The line between standard and specialty insurance is not always straightforward. A small office building in the suburbs is more standard while a chemical manufacturing facility of the same size would fall well under specialty. The more unusual the asset, the environment and potential loss, the more likely you are to use a specialty underwriter.

The most significant difference from standard insurers is that specialty insurers do not rely on scale and mass data the to underwrite risk, but instead use specialized knowledge and models to support their underwriter’s judgement. Often, specialist underwriters grow a very specific set of knowledge around their segment: engineering intricacies, political risk, weather models, etc. The policies themselves are much less standardized, with more levers around maximum paid, duration, repricing, conditions to be met or excluded events.

The benefits of investing in specialty insurers can be significant.

What makes specialty special?

The building of detailed knowledge in niche areas is its own self-reinforcing moat. An insurer that has been covering political risk for decades will have more claims data, stronger broker relationships and increasingly better understanding of the risks to avoid. Because these risks are harder to assess, pricing is generally less commoditized. As such, customer retention rates and margins tend to be higher.

Specialty insurers also have more flexibility to respond to changing environments. They can reduce the amount of coverage offered, increase deductibles, add exclusion clauses or just reduce their overall exposure.

A good example is the beginning of the conflict with Iran, when insurance contracts on ships were repriced every 72 hours for the first few weeks, with the ship/cargo coverage going from roughly 0.25% of the ship’s value to several percentage points more. In some cases, quotes were increasing by more than tenfold.

Lloyd’s of London, the world’s largest marketplace for specialty insurance, wrote over GBP57.9 billon of gross premiums in 2025 and reported a combined ratio of 87.6% (implying an operating margin of 12.4%). Combined with investment incomes, it generated a return on capital of 22%. This level of profitability also points to competition flowing in with new money, leading pricing to degrade by 3.7% as insurers compete for growth. Price weakness was especially elevated in corporate property and global reinsurance, with the latter seeing unprecedented influx of new alternative capital. Life and middle-market insurance are still seeing a hard market (a positive pricing environment).

This is typical of the ebb and flow of the insurance cycle. Strong profit attracts new capital, which creates more competition and pushes prices down. Returns eventually deteriorate or a major loss removes capital from the market, leading pricing to improve again. With a highly diversified specialty insurance market, different segments will be at different points in the cycle at different times. The best insurers are not those that grow the fastest; they are the ones that are willing to shrink their exposures to segments where pricing doesn’t adequately compensate for the risk taken, while identifying when to get back in for the right price. Seems a bit like equity investing.

What else differentiates specialty insurers? One thing is that in some segments, claims can take years to emerge, particularly in casualty, professional liability and D&O insurance. This can lead to current profits and underwriting quality looking good at the expense of future profitability. As such, firms need to strike a fine balance between maintaining enough insurance reserves for future claims, while also not over-penalizing short-term profit.

How do we have exposure?

One of the specialty insurers we own is Hiscox Ltd. (HSX LN), a Bermuda-based Lloyd’s insurer with a strong retail specialty presence. The company operates in three segments:

• Retail: specialty products to individuals and small businesses in the UK, Europe and the United States.
• London market: underwrites complex risk through the Lloyd’s market, with a strong focus on marine, energy, aviation, terrorism and political risk.
• Reinsurance: reinsurance for other insurers and insurance-linked capital supplied by outside investors.

In 2025, Hiscox wrote around $5.0 billion of contracts and has a reputation of excellent underwriting culture along with a best-in-class brand in the insurance world and among high-net-worth individuals.

Another name we own is US-based RLI Corp. (RLI US). It operates through a decentralized underwriting model and is a consistent top performer within the industry given its conservative underwriting and reserving. RLI focuses on the segments of niche properties, casualty and surety markets.

RLI has produced an underwriting profit for 30 consecutive years and increased its dividend for 50 consecutive years, an anomaly within the industry.

The specialty space is getting smaller

Within the sector, one of the big topics recently has been M&A. Twenty years ago, there were more than ten publicly listed Lloyd’s of London specialty insurers. Now only three remain, with the largest one – Beazley – in the process of being acquired by Zurich Insurance.

Given the attractive characteristics described above, it is easy to see why the large composite insurers would want to gain exposure to specialty insurers. Large composite insurers have significant capital to deploy and global distribution relationships, but lack the underwriting culture and specialist data required to enter these niche markets organically. Similarly for investors, specialty insurers can be compelling investments when they have the discipline to avoid bad risks and the expertise to price difficult risks better than competitors.

The post From kidnapping to cybersecurity – there’s a policy for that appeared first on Groupe financier Connor, Clark & Lunn ltée.

Ever thought of opening your own escape room or theme park?

Or maybe you’re thinking of contacting SpaceX to launch a satellite of your own?

It could be that you simply have a piece of art or expensive jewelry at home.

What if you’re trying to make it as an influencer where your online reputation is your most important asset?

To address all the above, and more, there is a niche segment within insurance called “specialty insurance.” As the name would suggest, specialty insurers attempt to cover risks that are too unusual, complex or volatile for standard insurers to price correctly. Examples of specialty insurance coverage include:

• cyber insurance,
• marine, aviation and energy risks,
• kidnap and ransom,
• directors’ and officers’ (D&O) risk, and
• niche businesses or properties.

Standard versus specialty insurance: What’s the difference?

The line between standard and specialty insurance is not always straightforward. A small office building in the suburbs is more standard while a chemical manufacturing facility of the same size would fall well under specialty. The more unusual the asset, the environment and potential loss, the more likely you are to use a specialty underwriter.

The most significant difference from standard insurers is that specialty insurers do not rely on scale and mass data the to underwrite risk, but instead use specialized knowledge and models to support their underwriter’s judgement. Often, specialist underwriters grow a very specific set of knowledge around their segment: engineering intricacies, political risk, weather models, etc. The policies themselves are much less standardized, with more levers around maximum paid, duration, repricing, conditions to be met or excluded events.

The benefits of investing in specialty insurers can be significant.

What makes specialty special?

The building of detailed knowledge in niche areas is its own self-reinforcing moat. An insurer that has been covering political risk for decades will have more claims data, stronger broker relationships and increasingly better understanding of the risks to avoid. Because these risks are harder to assess, pricing is generally less commoditized. As such, customer retention rates and margins tend to be higher.

Specialty insurers also have more flexibility to respond to changing environments. They can reduce the amount of coverage offered, increase deductibles, add exclusion clauses or just reduce their overall exposure.

A good example is the beginning of the conflict with Iran, when insurance contracts on ships were repriced every 72 hours for the first few weeks, with the ship/cargo coverage going from roughly 0.25% of the ship’s value to several percentage points more. In some cases, quotes were increasing by more than tenfold.

Lloyd’s of London, the world’s largest marketplace for specialty insurance, wrote over GBP57.9 billon of gross premiums in 2025 and reported a combined ratio of 87.6% (implying an operating margin of 12.4%). Combined with investment incomes, it generated a return on capital of 22%. This level of profitability also points to competition flowing in with new money, leading pricing to degrade by 3.7% as insurers compete for growth. Price weakness was especially elevated in corporate property and global reinsurance, with the latter seeing unprecedented influx of new alternative capital. Life and middle-market insurance are still seeing a hard market (a positive pricing environment).

This is typical of the ebb and flow of the insurance cycle. Strong profit attracts new capital, which creates more competition and pushes prices down. Returns eventually deteriorate or a major loss removes capital from the market, leading pricing to improve again. With a highly diversified specialty insurance market, different segments will be at different points in the cycle at different times. The best insurers are not those that grow the fastest; they are the ones that are willing to shrink their exposures to segments where pricing doesn’t adequately compensate for the risk taken, while identifying when to get back in for the right price. Seems a bit like equity investing.

What else differentiates specialty insurers? One thing is that in some segments, claims can take years to emerge, particularly in casualty, professional liability and D&O insurance. This can lead to current profits and underwriting quality looking good at the expense of future profitability. As such, firms need to strike a fine balance between maintaining enough insurance reserves for future claims, while also not over-penalizing short-term profit.

How do we have exposure?

One of the specialty insurers we own is Hiscox Ltd. (HSX LN), a Bermuda-based Lloyd’s insurer with a strong retail specialty presence. The company operates in three segments:

• Retail: specialty products to individuals and small businesses in the UK, Europe and the United States.
• London market: underwrites complex risk through the Lloyd’s market, with a strong focus on marine, energy, aviation, terrorism and political risk.
• Reinsurance: reinsurance for other insurers and insurance-linked capital supplied by outside investors.

In 2025, Hiscox wrote around $5.0 billion of contracts and has a reputation of excellent underwriting culture along with a best-in-class brand in the insurance world and among high-net-worth individuals.

Another name we own is US-based RLI Corp. (RLI US). It operates through a decentralized underwriting model and is a consistent top performer within the industry given its conservative underwriting and reserving. RLI focuses on the segments of niche properties, casualty and surety markets.

RLI has produced an underwriting profit for 30 consecutive years and increased its dividend for 50 consecutive years, an anomaly within the industry.

The specialty space is getting smaller

Within the sector, one of the big topics recently has been M&A. Twenty years ago, there were more than ten publicly listed Lloyd’s of London specialty insurers. Now only three remain, with the largest one – Beazley – in the process of being acquired by Zurich Insurance.

Given the attractive characteristics described above, it is easy to see why the large composite insurers would want to gain exposure to specialty insurers. Large composite insurers have significant capital to deploy and global distribution relationships, but lack the underwriting culture and specialist data required to enter these niche markets organically. Similarly for investors, specialty insurers can be compelling investments when they have the discipline to avoid bad risks and the expertise to price difficult risks better than competitors.

The post From kidnapping to cybersecurity – there’s a policy for that appeared first on Groupe financier Connor, Clark & Lunn ltée.

Official M2 rose by an annualised 7.3% between December and June, the strongest six-month increase since March 2022. The broader M2+ measure calculated here – which additionally includes large time deposits and institutional money funds – expanded by 8.5% over the same period. Growth of narrow money M1A (currency plus demand deposits) was faster still, at 10.6% – see chart 1.

Chart 1

Money growth is reflected in some combination of real GDP expansion, inflation and falling velocity. Even optimists would doubt that current potential GDP growth is more than 3% pa. Broad money expansion of more than 8%, therefore, requires a contraction in velocity of at least 3% pa to be consistent with 2% inflation. Such a decline is implausible on a trend basis: M2+ velocity fell by an average 0.8% pa over 1960-2025.

US monetary acceleration contrasts with weakness or slowdowns in other developed economies. Six-month broad money growth in June was 4.1% annualised in the Eurozone (non-financial M3), 2.9% in the UK (non-financial M4) and 1.3% in Japan (M3) – chart 2.

Chart 2

Six-month real narrow money momentum remains negative in the Eurozone, UK and Japan even as US growth moves above a 2024 high – chart 3.

Chart 3

The scale of the monetary divergence goes beyond signalling a stronger case for US policy tightening, suggesting that other central banks should be moving in the opposite direction to the Fed.

What explains US acceleration? Unlike other central banks, the Fed has never published a “counterparts” analysis of broad money. However, the key drivers are likely to have been stronger bank lending – commercial bank loans and leases grew by 8.2% annualised in the six months to June, up from 6.3% in the prior half-year – and the Fed’s resumption of QE (“reserve management purchases”) from December. External flows may also have contributed, reflecting strong foreign buying of US equities.

“Monetary financing” is a broader concept than QE, encompassing purchases of Treasury bills and notes by commercial banks and money funds as well as QE and changes in the Treasury’s balance at the Fed. The level of money growth in the US continues to be inflated relative to other developed economies by monetary financing of a much larger fiscal deficit – chart 4.

Chart 4

The post US money update: further acceleration appeared first on Groupe financier Connor, Clark & Lunn ltée.

Official M2 rose by an annualised 7.3% between December and June, the strongest six-month increase since March 2022. The broader M2+ measure calculated here – which additionally includes large time deposits and institutional money funds – expanded by 8.5% over the same period. Growth of narrow money M1A (currency plus demand deposits) was faster still, at 10.6% – see chart 1.

Chart 1

Money growth is reflected in some combination of real GDP expansion, inflation and falling velocity. Even optimists would doubt that current potential GDP growth is more than 3% pa. Broad money expansion of more than 8%, therefore, requires a contraction in velocity of at least 3% pa to be consistent with 2% inflation. Such a decline is implausible on a trend basis: M2+ velocity fell by an average 0.8% pa over 1960-2025.

US monetary acceleration contrasts with weakness or slowdowns in other developed economies. Six-month broad money growth in June was 4.1% annualised in the Eurozone (non-financial M3), 2.9% in the UK (non-financial M4) and 1.3% in Japan (M3) – chart 2.

Chart 2

Six-month real narrow money momentum remains negative in the Eurozone, UK and Japan even as US growth moves above a 2024 high – chart 3.

Chart 3

The scale of the monetary divergence goes beyond signalling a stronger case for US policy tightening, suggesting that other central banks should be moving in the opposite direction to the Fed.

What explains US acceleration? Unlike other central banks, the Fed has never published a “counterparts” analysis of broad money. However, the key drivers are likely to have been stronger bank lending – commercial bank loans and leases grew by 8.2% annualised in the six months to June, up from 6.3% in the prior half-year – and the Fed’s resumption of QE (“reserve management purchases”) from December. External flows may also have contributed, reflecting strong foreign buying of US equities.

“Monetary financing” is a broader concept than QE, encompassing purchases of Treasury bills and notes by commercial banks and money funds as well as QE and changes in the Treasury’s balance at the Fed. The level of money growth in the US continues to be inflated relative to other developed economies by monetary financing of a much larger fiscal deficit – chart 4.

Chart 4

The post US money update: further acceleration appeared first on Groupe financier Connor, Clark & Lunn ltée.

The PMI rebound may reflect a boost to sentiment from a May / June fall in energy prices, which has since reversed – see chart 1.

Chart 1

Money trends were soft even before June’s rate hike. The preferred broad measure here – non-financial M3, comprising holdings of households and non-financial corporations (NFCs) – rose by an annualised 4.1% in the six months to June, below a pre-pandemic (i.e. 2015-19) average of 4.9%. Narrow money developments are more worrying, with six-month growth of non-financial M1 falling to 2.5% last month, having peaked at 5.2% in September 2025 – chart 2.

Chart 2

The sector breakdown shows similar weakness in household and NFC M1 components. Meanwhile, six-month real narrow money momentum, which led the PMI recovery over 2023-25, turned negative in April, remaining so in May-June – chart 3.

Chart 3

Optimists cite respectable bank loan growth, of 4.6% annualised in the latest six months. Statistical studies, however, have long shown that lending is a coincident or lagging economic indicator, whereas money leads. Six-month loan growth may have peaked at 4.9% in March. The latest ECB quarterly bank lending survey, while less downbeat that the previous poll conducted at the height of Gulf hostilities, suggests a slowdown – chart 4.

Chart 4

The post Eurozone money update: signal still downbeat appeared first on Groupe financier Connor, Clark & Lunn ltée.

The PMI rebound may reflect a boost to sentiment from a May / June fall in energy prices, which has since reversed – see chart 1.

Chart 1

Money trends were soft even before June’s rate hike. The preferred broad measure here – non-financial M3, comprising holdings of households and non-financial corporations (NFCs) – rose by an annualised 4.1% in the six months to June, below a pre-pandemic (i.e. 2015-19) average of 4.9%. Narrow money developments are more worrying, with six-month growth of non-financial M1 falling to 2.5% last month, having peaked at 5.2% in September 2025 – chart 2.

Chart 2

The sector breakdown shows similar weakness in household and NFC M1 components. Meanwhile, six-month real narrow money momentum, which led the PMI recovery over 2023-25, turned negative in April, remaining so in May-June – chart 3.

Chart 3

Optimists cite respectable bank loan growth, of 4.6% annualised in the latest six months. Statistical studies, however, have long shown that lending is a coincident or lagging economic indicator, whereas money leads. Six-month loan growth may have peaked at 4.9% in March. The latest ECB quarterly bank lending survey, while less downbeat that the previous poll conducted at the height of Gulf hostilities, suggests a slowdown – chart 4.

Chart 4

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None of us is naturally comfortable with uncertainty. We prefer some sense of direction, such as a set of expectations or map that helps us understand what may lie ahead and how we might respond. Think about ordering an Uber. We choose the type of vehicle we want, see an estimated arrival time and then watch the driver’s route unfold on a map. The map does not make the car arrive any faster but reduces the anxiety of the uncertainty of when the driver may arrive.

Investing, unfortunately, does not come with the same kind of map. Financial markets are complex, constantly changing and shaped by forces that cannot be predicted with certainty. But successful investing is not about eliminating uncertainty. Instead, it is about navigating uncertainty through thoughtful decisions in spite of it. This article explores a set of decision-making principles designed to help investors navigate uncertainty with greater discipline, confidence and perspective.

Decision-making principles

Decision-making is often viewed as choosing between alternatives, but the real value lies in the process that precedes the choice. Effective decision-making requires clarity about objectives, an understanding of the available options and a careful assessment of the potential consequences. It is less about finding the “right” answer and more about making choices that can withstand changing circumstances. A robust process helps distinguish between actions that are merely appealing today and those that remain resilient over time.

In investing, uncertainty is unavoidable. Success does not come from predicting the future with precision, but from making decisions that can perform across a range of outcomes. By applying disciplined principles around forecasting, risk-taking, diversification, behavioural awareness and managing groupthink, investors can build portfolios and decision frameworks that are better equipped to navigate whatever the future may bring. Uncertainty never disappears, but a strong decision-making process can transform the unknown from a possible threat into something that can be managed.

Principle 1 – Understand the role of predictions

Every investment decision is a prediction. Whether we realize it or not, allocating capital reflects a view about how the future may unfold. The challenge is that the future is unknowable. That is why the goal of prediction is not accuracy for its own sake, but better decision-making. Predictions help investors assess possibilities, weigh probabilities and make more informed choices in an uncertain world.

The key is recognizing that investing is a game of probabilities, not certainties. Rather than asking “What will happen?”, investors should ask “What could happen, and how should I prepare for it?” That shift in mindset can lead to more resilient portfolios and better long-term outcomes.

Principle 2 – Take risks deliberately

The most successful investors understand that uncertainty is a permanent feature of markets and that avoiding risk altogether is often the greatest risk of all. Instead, they take risks deliberately, focusing on opportunities where the potential reward justifies the uncertainty and constructing portfolios that can withstand a range of outcomes. Predictions play a vital role, not because they reveal the future, but because they help investors evaluate probability, challenge consensus views and identify where expectations may be misplaced. Risk management then takes over, ensuring the portfolio remains robust even when those predictions prove wrong. The combination of the two creates a powerful framework for navigating uncertainty. Think of it as prediction being about reducing uncertainty, while risk management is about succeeding despite it.

Principle 3 – Diversification needs to work harder

Diversification matters, but it cannot be set and forgotten. The recent period of rising inflation and bond yields was a reminder that equities and bonds can fall together, and that bonds may protect if growth weakens, but not if inflation expectations rise. Many investors have moved beyond equities and bonds introducing a component of alternative investments, but these are not without their own challenges in times of stress. The point is not to own a bit of everything; instead, the decision should be to know why you own each exposure, what returns it delivers or what risk it mitigates and whether you are still being rewarded to invest in it.

Principle 4 – Understand the impact of emotional influence

Investors spend considerable time trying to understand markets, economies and companies. Yet some of the most important drivers of investment outcomes come from within. Fear can magnify risks. Optimism can overlook them. Confidence can create conviction, but it can also create complacency. Understanding these emotional forces is a critical part of successful decision-making.

The objective is not to remove emotion from investing, but to recognize its influence. Investors who develop emotional awareness and discipline are often better positioned to make consistent decisions, remain committed to long-term objectives and navigate uncertainty without being driven by it. This is where emotional intelligence can contribute to more successful investment outcomes.

Principle 5 – Beware of groupthink and overconfidence

The quality of a committee’s decisions is often determined not by how quickly it reaches agreement, but by how effectively it challenges its own assumptions. Groupthink and overconfidence can emerge when optimism goes untested. Mental contrasting provides a practical antidote. By asking committee members to envision both the most desirable realistic outcome and the obstacles that could derail it, the conversation shifts from confirmation to exploration. This approach not only improves the quality of decisions but also encourages constructive dissent, strengthens governance and fosters a culture where challenging ideas are viewed as a contribution rather than criticism.

Principle 6 – Appreciate the benefit of adaptability

In practice, adaptability can take many forms: reassessing capital market assumptions, refining portfolio positioning, revisiting liquidity needs or updating governance processes as conditions evolve. Adaptability is often the bridge between a sound strategy and successful outcomes. While no investor can foresee every economic shift or market disruption, those who remain flexible in their thinking and disciplined in their decision-making are better equipped to respond to changing conditions. In an uncertain world, the ability to adapt may be just as valuable as the ability to forecast.

Navigating uncertainty

The future will always be uncertain. Success belongs not to those who predict it most accurately, but to those who are best prepared for the many ways it may unfold. Uncertainty is not a temporary condition that investors must endure until markets become clearer. It is a permanent feature of investing. The challenge is not to eliminate uncertainty but to make sound decisions despite it.

While forecasts, models and analysis can improve our understanding of what may lie ahead, they cannot provide certainty about the future. The most successful investors recognize that investment success comes from building robust decision-making processes that acknowledge uncertainty, evaluate probabilities and remain adaptable as the latest information emerges. This requires taking risks deliberately, diversifying with purpose, challenging assumptions, encouraging constructive debate and maintaining the discipline to adjust when the facts change.

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L’intelligence artificielle (IA) est souvent présentée comme un défi technologique, mais son adoption réussie repose avant tout sur le leadership et la transformation des activités.

Dans un récent article de Human Resources Director, Ankur Saxena, directeur, Stratégie technologique, et Diana Bartolic, chef des Ressources humaines, expliquent pourquoi l’adoption de l’IA exige bien plus que de nouveaux outils et de nouvelles technologies. Elle nécessite un leadership dédié, une gouvernance efficace, une gestion du changement réfléchie et un engagement à aider les employés à s’adapter à l’évolution des rôles et des façons de travailler.

Comme le souligne Ankur, l’IA est « en grande partie une initiative de transformation des activités, plutôt qu’une initiative technologique ». Diana insiste pour sa part sur l’importance de soutenir les employés pendant cette période de transformation importante du milieu de travail et de veiller à ce que les organisations disposent des structures nécessaires pour gérer le changement de façon responsable.

Au Groupe financier CC&L, nous croyons que la création de valeur à long terme grâce à l’IA exige d’investir non seulement dans la technologie, mais aussi dans le capital humain, les processus et le leadership nécessaires pour en assurer une adoption efficace, responsable et conforme aux objectifs d’affaires.

Lire l’article complet : AI enablement officer: the new sheriff in transformation town (en anglais seulement)

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