Economic and Political Monthly Roundup
Kindly sponsored by Allianz
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.
All eyes are still very much on the conflict in Ukraine, which has shattered any hope of a return to normality in 2022 after two years of volatility and uncertainty. Added to the cocktail are inflation woes, continued supply chain concerns and COVID-19 (which remains a problem, particularly in China). The oil price is creeping towards all-time highs while bond yields continue to climb. It looks as though the global economy is back at square one.
John Evans, chair of Securities Trust of Scotland, says there currently seems to be no respite in the challenges being thrown at financial markets.
Scottish Mortgage’s Tom Slater reflects on a tough year and why it is more useful to observe and analyse geopolitical and macroeconomic developments than to engage in futile attempts at prediction.
The chair of North Atlantic Smaller Companies explains why businesses are attempting and largely succeeding in putting through price increases.
Majedie’s chief executive admits that the invasion of Ukraine, apart from the horrendous human cost, has changed a previously optimistic outlook.
Steve Bates, chair of JPMorgan Elect, says conditions over the next several months are uncertain and that longer term, even with tighter monetary conditions, real rates will remain negative, and equities are likely to offer shelter.
The managers of Keystone Positive Change highlight that scaling up renewable technologies will mean innovative companies and impact-focused investors can play an invaluable role in tackling climate change.
The managers of Edinburgh Investment Trust say that if the events in Ukraine are a reminder of anything, they are of the importance of managing a sensibly diversified portfolio.
Downing Strategic Micro-Cap’s Judith MacKenzie summarises the unforeseen events that have occurred just when it seemed like markets might normalise.
BMO Capital & Income’s chair says there is a great deal of uncertainty at present, from inflationary pressures not seen in decades, rising commodity prices, supply-chain disruption and China still struggling with COVID-19, to a nuclear-armed aggressor starting a major war in Europe.
The managers of Schroder Income Growth consider the implications on energy security, which has become a key priority with governments re-thinking any reliance on Russian supply.
abrdn Equity Income’s manager says the resilience of the UK equity market during the period stands in contrast to the weakness seen in other major stock markets, many of which posted heavy declines.
The managers of Lowland say the well-chronicled problems facing the economy are currently the focus of investor attention – but that the surprise may be how well many UK companies cope with these challenges.
Finsbury Growth & Income’s Nick Train believes there may be a speculative bubble deflating in technology company shares.
BMO UK High Income’s manager notes that there are still supply chain constraints coupled with pent-up demand, and that the rising cost of living will weigh on the consumer.
The managers of Henderson European Focus say the invasion marks a significant shift, or at least an acceleration of emergent trends, leading to greater localisation of supply chains and prioritised tangible investment into energy, infrastructure and defence.
The managers of Baillie Gifford European Growth say optimism, open-mindedness, and an ability to cut through short-term noise is vital if one is to exploit the long-term returns outliers can generate.
BlackRock Greater Europe’s managers expect greater dispersion between sector and stock outcomes and with that a need for continued selectivity.
Biotechnology & healthcare
The chair of Worldwide Healthcare says a shadow has been cast over the longer-term outlook for the sector with the prospect of continued raised levels of geopolitical risk and an increase in investor risk aversion.
The managers of Polar Capital Global Healthcare highlight home health as an area that should see considerable growth over the medium-term as healthcare systems look to shift patient volumes to lower-cost and more convenient settings.
International Biotechnology’s managers say the biotechnology sector has experienced a significant period of weakness in certain areas since the highs of spring 2021 and that valuations at current levels look attractive.
We have also included comments on global emerging markets from BlackRock Frontiers and Barings Emerging EMEA Opportunities; Asia Pacific from Pacific Assets, Schroder AsiaPacific and Schroder Oriental Income; Japan from abrdn Japan and JPMorgan Japanese; China from JPMorgan China Growth and Income and Fidelity China Special Situations; Latin America from abrdn Latin American Income; country specialist from Weiss Korea Opportunity; flexible investment from Capital Gearing, Caledonia and JPMorgan Multi-Asset Growth & Income; infrastructure from HICL Infrastructure, Cordiant Digital Infrastructure and Ecofin Global Utilities & Infrastructure; private equity from ICG Enterprise; debt from TwentyFour Select Monthly Income and property from LondonMetric, Tritax EuroBox, Shaftesbury, Helical, Great Portland Estates, Ediston Property, British Land, Land Securities, Picton Property and Assura.
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Kindly sponsored by Allianz
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