Economic and Political Monthly Roundup
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A collation of recent insights on markets and economies taken from the comments made by chairs 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.
Roundup
The threat of recession seems more and more likely as rising inflation, supply chain woes, oil price volatility (as a result of the ongoing war in Ukraine) and of course the pandemic, remain key macroeconomic challenges. Two 0.75% US interest rate rises in quick succession, and a higher-than-expected increase in European interest rates, appear to have convinced investors that inflation will eventually be tamed; bond yields plummeted. UK equity markets enjoyed an upturn, although a contributing factor may well have been the announcement of Prime Minister Boris Johnson’s resignation. Meanwhile, the month saw other major global events including the assassination of former Japan prime minister Shinzo Abe, wildfires across Europe as a result of record-breaking heatwaves while the World Health Organisation declared monkeypox a global health emergency.
July’s highlights
Global
Brunner’s chair discusses the ‘silver lining’ for bottom-up investors.
Paul Niven, manager of F&C, shares fears of a recession to hit developed economies later this year and into 2023.
Despite a ‘bleak’ backdrop, the chair of Herald is reassured by signs of bubbles deflating – especially in the US.
The managers of Scottish American say the world economy still faces a great deal of uncertainty.
UK
The managers of Aberforth Split Level income list four macroeconomic challenges that they believe are increasing the risk of recession later this year.
John Dodd and Kartik Kumar of Artemis Alpha say that over time, cash-generative franchises with duration will find ways to adapt to inflation.
Miton UK Microcap’s chair highlights the benefits of investing in microcap companies in the face of current macro concerns.
The managers of Oryx International Growth think that the global economic picture has arguably rarely looked more uncertain.
SVM UK Emerging’s manager says there are signs that the UK economy is adapting to the disruption in supplies, creating opportunity for new onshore suppliers to replace risky ones overseas.
Richard Davidson, chair of Aberforth Smaller Companies says he is perplexed that government bond markets are not more concerned about inflation.
BlackRock Throgmorton’s Dan Whitestone believes a valid market concern is that sell-side forecasts look too high.
The managers of Law Debenture think that in a year’s time, as the large jump in energy costs work their way out, inflation will likely retreat.
Flexible investment
The JPMorgan Global Core Real Assets team share their outlooks for real estate, infrastructure and transport.
Nick Greenwood and Charlotte Cuthbertson, managers of MIGO Opportunities say they expect that there could be more volatility to come as the global economic headwinds put pressure on markets.
Technology & media
Tim Levene of Augmentum Fintech says the volume of venture capital raised over the last two years leaves significant “dry powder” commitments across Europe.
Polar Capital Technology’s manager thinks we are facing a more uncertain macroeconomic backdrop than at any stage since the pandemic.
Other
We have also included comments on Asia Pacific from abrdn New Dawn; Japan from Atlantis Japan Growth; India from Aberdeen New India; China from abrdn China; Russia from JPMorgan Russian; private equity from Seed Innovations; debt from Henderson Diversified Income and TwentyFour Income; financials from Polar Capital Global Financials; growth capital from Schroder British Opportunities; infrastructure from Sequoia Economic Infrastructure Income; renewable energy infrastructure from Gore Street Energy Storage, Greencoat UK Wind and Harmony Energy Income; biotechnology & healthcare from Bellevue Healthcare; royalties from Hipgnosis Songs; environmental from Jupiter Green; leasing from Doric Nimrod Air Three and Doric Nimrod Air Two and property from SEGRO, Hammerson, Primary Health Properties and Unite Group.
Full version
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