Surprises in European equities

Why have European equities performed so well in 2019 and what are the prospects for 2020? For much of 2019, European equities were an unloved asset class, shunned by investors. At first sight, this was understandable – the region is growing only slowly, wracked by political tensions and wrestling with headwinds in vital sectors such as … Continue reading “Surprises in European equities”

The biggest victim of US tariffs in 2020 could be the EU

The tariff battle between Washington and Beijing is far from over, but the biggest battle for US trade hawks over the next 12 months is likely to be with Europe. The global trade slowdown has already hit the European economy hard. Brussels has been forced to cut its growth forecasts for the eurozone to its … Continue reading “The biggest victim of US tariffs in 2020 could be the EU”

UK election: what does the result mean for the economy and investors?

Boris Johnson has been confirmed as prime minister after the Conservative party made sweeping gains. The Conservative majority government has three key implications for Brexit, which is the most pressing issue for the UK economy. First, it all but guarantees that the UK will leave the European Union (EU). This election was the last barrier … Continue reading “UK election: what does the result mean for the economy and investors?”

Don’t lose your investment marbles in emerging markets

If one of your investments jumped 3,800% in less than a year how happy would you be? Ecstatic, probably. Now imagine how you would feel if 98% of these gains evaporated within a short few minutes. Utterly terrible, I’m sure. Well, that’s exactly what happened to shareholders in Hong Kong listed ArtGo last month  – … Continue reading “Don’t lose your investment marbles in emerging markets”

Deforestation leaves investors exposed

Owning companies linked to forest destruction risks major financial losses. But focusing on engagement and demanding transparency and supply chain discipline could bring rich rewards. Deforestation linked to growing commodities demand presents significant risk of loss for investors, but also opportunities to benefit by engaging companies and adding to pressure for stricter policy actions. Deforestation … Continue reading “Deforestation leaves investors exposed”

Markets can get too exuberant

The recent all-time highs in the S&P 500 this week mean it has now hit more records this year than it did in 2018. There may even be more to come. However, it was at this time last year that an equity market sell-off gathered steam, with the usual “Santa Claus” rally failing to materialise. … Continue reading “Markets can get too exuberant”

Are we witnessing the US dollar’s fall from grace?

A world in which money is scarce might appear to be a far-fetched idea. But for US banks in the business of taking deposits and making loans, this has become a reality. The chart below shows a global shortage of US dollars has emerged, shown in the left hand vertical axis in  billions. It has … Continue reading “Are we witnessing the US dollar’s fall from grace?”

How far will the monetary boost go?

The world’s central banks are keen to boost economies. Many are using the scope of falling US interest rates to do something similar themselves. Some are worried about the lack of money in the markets and are taking action to boost liquidity. Some are concerned about a low rate of new borrowing reflecting poor rates … Continue reading “How far will the monetary boost go?”

UK economy rebounds to avoid recession

Unless the economy improves and a smooth Brexit is achieved, interest rates may be lowered.  The first release of UK GDP for the third quarter shows the economy avoided a technical recession. Real GDP growth was 0.3% quarter-on-quarter compared to -0.2% in the second quarter, although the latest figure did disappoint consensus expectations of 0.4%. … Continue reading “UK economy rebounds to avoid recession”

Investors must get used to an environment of lower growth

We will have to get used to an environment of lower growth. However, this is the kind of environment in which active managers will truly prove their worth. “Nobody buys a farm based on whether they think it’s going to rain next year. They buy it because they think it’s a good investment over 10 … Continue reading “Investors must get used to an environment of lower growth”

Muddling through with low interest rates

Central bank action has supported markets this year but we need to see a recovery in corporate earnings. The world should escape a general recession this winter. The forecast manufacturing downturn has occurred, led by falls in vehicle output. Individual countries have flirted with recession. Italy was in a shallow recession last year, and German … Continue reading “Muddling through with low interest rates”

Bank of England takes dovish turn, but for how long?

The Bank of England (BoE) left interest rates at 0.75% as expected. However, there was a surprise as two members of the monetary policy committee voted to cut rates. The more dovish1 vote (7-2 rather than the widely expected 9-0) came alongside a downgrade to the bank’s global growth assumptions. Weaker UK growth is also … Continue reading “Bank of England takes dovish turn, but for how long?”

A look at equity markets in Japan and China

On a day when Wall Street has reached new all-time highs, there has been some favourable effects on equity markets around the world. The bulls are buying, hoping that there will be some modest trade deal soon between the US and China. Meanwhile, all can enjoy the benefits of low-interest rates and more money available … Continue reading “A look at equity markets in Japan and China”

Smooth Brexit could be on cards as election looms

A smooth Brexit could remove some of the fog of uncertainty over the UK economic outlook, a prospect made more likely by the agreement to extend the deadline to 31 January 2020. EU President, Donald Tusk, has announced that the EU has agreed in principle an extension to the Brexit deadline to 31 January 2020. … Continue reading “Smooth Brexit could be on cards as election looms”

The comfort of strangers: investors should look to the less familiar

Adaptation is necessary when an environment becomes less favourable. So, as the global outlook assumes a gloomier cast, we believe investors should look beyond the comfort of conventional asset classes and bolster their portfolios with less familiar – and less correlated – assets. Secular stagnation? Recent headlines provide no shortage of alarming developments: a lurch … Continue reading “The comfort of strangers: investors should look to the less familiar”