It’s undeniable that we’re living in an epoch of technological transformation. And one that is unprecedented in history. With the creation of thinking machines, we face technologies that could end up competing directly with what it means to be human. This changes the rules of the game. And the policy responses to cope will have to be equally innovative. There is a number of structural shifts that are happening in lockstep, most of which are rooted in demography. Disentangling these interwoven threads will be difficult. Explaining the impact of these changes to an electorate whose lives are being disrupted will be a task of even greater magnitude.

North Korea can go four ways from here. 1) Nothing changes. 2) Voluntary unification (German style). 3) Implosion. 4) Or development along the lines of the Chinese model 20 years ago. This is the most likely scenario (60% probability). Much of the cost would be transferred from the South Korean budget to the private sector, leading to outward flows of FDI and repatriation of profits. There is no diaspora as there is no free movement of labour between North and South. Under this scenario South Korean equities would be the major beneficiary. And the budget and the won don’t suffer much.

Policy measures taken by the Chinese authorities show they are serious about combatting risks to growth. These were the consequence of earlier efforts to deleverage, but are now being compounded by the developing trade war. The steps are significant enough to negate the need to retaliate with a weaker renminbi and should offset the drag tariffs will have on net trade. We are neutral on the renminbi versus the US dollar. This shift is not yet reflected in domestic equity prices, which have been dulled by the protectionist cloud. We would be long Chinese equities.