European stocks shrug off Catalonia vote
European stock markets remained on the whole resilient, despite the furore over Catalonia’s bid for independence from
Spain. That country’s IBEX 25 has been understandably volatile, though rallied towards the end of the week after
reports that the Spanish government was to issue a decree to make it easier for companies to move their legal base
outside of Catalonia. The region’s president, Carles Puigdemont, is considering declaring independence from Spain,
after 90% of participants in last week’s referendum voted to break away.
Hurricanes hit US leisure sector jobs
The number of people in employment in the US fell for the first time since 2010, impacted largely by hurricanes Harvey
and Irma. Between the 10th and 16th of September, the Labor Department reported that 33,000 jobs were lost with a
drop in the leisure and hospitality sector. However, the overall unemployment rate was at 4.2%, its lowest since
February 2001. The strongest job gains were in healthcare and transportation and warehousing. Average hourly
earnings data also comfortably beat expectations, coming in at 2.9% year-on-year.
UK worker productivity dips
The Office for National Statistics calculated the productivity of UK workers has fallen for the second quarter in a row.
Hourly output fell 0.1% in the April to June period, following a 0.5% decline in the first three months of the year. On an
annual basis, from June 2016 to June 2017, which covers the 12 months after the EU referendum, hourly output fell by
0.3%. Long-term data shows UK productivity has stagnated since the financial crisis first struck in 2008.
Under fire May to “prove wrong” Brexit doomsayers
After her calamitous speech at last week’s Conservative party conference, prime minister Theresa May told the House
of Commons that the UK can “prove the doomsayers wrong” when it comes to Brexit in seeking the best possible deal
for the UK with the EU. The fifth round of Brexit negotiations begins this week in Brussels, the last before an EU summit
on 19
th October. At home, May is facing what some are calling a “make or break” week as commentators talk up the
possibility of a leadership challenge.


Forget Japan’s ‘Abenomics’, time for ‘Yurinomics’?

With the Japanese general election just weeks away (22 October), Tokyo governor Yuriko Koike last week challenged
prime minister Shinzo Abe’s famous ‘Abenomics’ with her own platform of financial reform, ‘Yurinomics’. Koike’s new
Party of Hope has pledged to tax corporate cash reserves, and introduce a basic income guarantee. However, it now
seems unlikely that Koike herself will stand, with opinion polls suggesting that voters do not want her to quit her job in
Japan’s capital.
Having called the snap election in September, Abe is expected to remain in power with his Liberal Democratic Party-led
coalition. He has been boosted by latest data from the closely watched Tankan survey of Japanese companies, which
found business conditions are at their strongest for a decade. Since he came in to power in 2012, Abenomics has led
the Bank of Japan to slash interest rates and purchase trillions of yen in government bonds in an effort to ward off
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Japan business confidence – Tankan index
Source:, Bank of Japan

Chinese gears up for leadership change
China celebrated its Mid-Autumn holiday last week but now its fully refreshed leaders are preparing for the 19th Party
Congress beginning on 18th October. The event will see changes to the makeup of the leadership of the Communist
Party of China with the country’s soaring debt likely to be among the big topics under discussion (see Market Update,
25th September).
Stock markets were closed last week for the break but opened higher on Monday, despite private survey data showing
that business activity in the Chinese service sector has slowed. The Caixin/Markit services purchasing managers’ index
(PMI) fell to 50.6 in September (a reading above 50 indicates growth). This was the lowest reading since December
2015 and one of the weakest since the survey began in 2005. Official PMI data shows a more positive picture, meaning
investors must read between the lines to draw their own conclusions. Emerging markets, of which China is the largest,
have remained remarkably resilient this year and the Omnis Managed Portfolio Service remains overweight this asset
class due to cheaper stock prices and encouraging earnings figures.
China PMI surveys
Source: National Bureau of Statistics, Caixin


Through a well-diversified approach to asset allocation, the Omnis investment team aims to defend and grow the value
of your portfolio through market cycles. The Japanese prime minister’s Abenomics programme of monetary easing,
fiscal stimulus and structural reform has had its critics over the years, but it has inarguably been good for investors with
both the Topix and the Nikkei 225 having returned over 100% over the past five years. The Omnis Managed Portfolio
Service team remains comfortable with our positioning in the country, and Asia as a whole, which has been a strong
contributor to growth in our equity holdings.