QuotedData’s Economic round up – September 2018 is a collation of recent insights on markets and economies taken from the comments made by chairmen and investment managers of investment companies – have a read and make your own minds up. Please remember that nothing in this note is designed to encourage you to buy or sell any of the companies mentioned. Kindly sponsored by Polar Capital.
Global trade tensions continued to exercise the minds of global investors, not helped by the currency crisis in Turkey. The US was the only one of the major markets that delivered positive performance, together with the ASEAN markets of Thailand, Taiwan, South Korea and Philippines. Other emerging markets and other global markets delivered negative returns over the month.
Global
Although the global economic outlook appears relatively benign, there are many reasons for chairmen and managers to be cautious.
The chairmen and investment managers of global companies were very much in agreement that the outlook for the foreseeable future is dominated by some relatively intransigent issues. These include (in no particular order) the direction of US interest rates, US trade policy, US mid-term elections, emerging market currency weakness, Brexit and geopolitics in general. Patrick Gifford, chairman of Invesco Perpetual Select, refers to many of these issues as “non-binary”.
There is consensus that Brexit negations will get over the line, despite those who Harry Henderson, chairman of Witan, describes as “zealots” on both sides. Harry Henderson goes on to say that economic growth and modest inflation, with modest although rising interest rates, would ordinarily be positive for equities. However, he thinks that, relative to bonds, equities are still fairly valued, whereas others, including the Lord Rothschild, Scott Wolle, portfolio manager of the Balanced Risk Allocation Portfolio of Invesco Perpetual Select and Kevin Carter, chairman of Murray International, feel that valuations are at record highs.
Lord Rothschild of RIT Capital states that “… we continue to believe that this is not an appropriate time to add to risk. Current stock market valuations remain high by historical standards, inflated by years of low interest rates and the policy of quantitative easing which is now coming to an end.” Nick Mustoe, portfolio manager of the Global Equity Income Share Portfolio of Invesco Perpetual Select makes the point that tough trade talk is more the norm, but it is now hitting market sentiment in that it could slow global economic growth. He goes on to write that this and whilst there are some warning signs of the potential for more difficult economic conditions, he believes the global economic outlook is benign, with modest economic growth and few signs of significant inflationary pressure.
QuotedData’s Economic round up – September 2018