INSPIRATION IN WEALTH MANAGEMENT
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Market comment 17.10.16
|Posted on 20/10/2016|
A changing wind?
Chinese CPI may also be on the rise. It shot up to 1.9% in September, after slumping to 1.3% the previous month. This was driven by a large increase in the cost of food. Meanwhile, producer prices (factory gate prices) increased for the first time in four and a half years. The index rose just 0.1%, so we will have to wait and see if this is the start of an upward trend. For many years it has helped push worldwide prices lower. If the wind changes, it may start to have the opposite effect.
Courtesy of Rathbones
|Posted on 04/05/2016|
The two most reliable indicators of how the Brexit referendum will play out continue to be the behaviour of sterling in foreign exchange markets and the betting odds. In recent days both have shifted slightly in favour of the Remain camp, with sterling improving against both the dollar and the euro, and odds shortening for a Remain result.
However, a lot can happen between now and 23rd June, and it is interesting to note that the pound has not been the only casualty – there are growing signs that the UK economy is faltering, with weak unemployment numbers earlier in April, and slowing GDP growth. How much of this is down to referendum worries is impossible to tell, but we know that markets and businesses dislike uncertainty, and fears about the future direction of the nation must be top of that list.
From an investment management standpoint, we continue to position portfolios to be largely agnostic about the outcome, not least because it would be risky on what is still a close-call vote to do otherwise. If we leave the EU, the dollar and other overseas elements of our client portfolios would benefit greatly from an almost certain devaluation of sterling. If we remain, then the UK element of portfolios would benefit from a probable uplift in the UK equity market, as well as a bounce back in the UK’s economic growth later in the year. In either scenario, we are comfortable with our decision to reduce slightly our commitment to equity markets and hold some cash: there will be some interesting opportunities in the coming months, and having a modest element of cash in our client portfolios will provide us with the flexibility to ensure we can benefit from these.
Courtesy of Bordier & Cie (UK) Plc
|Posted on 15/03/2016|
The new year has started in a more challenging manner than even the hungriest bears and doomsday merchants probably expected. Against a backdrop of weak commodity prices and a long list of worries including another recession, interest rate turmoil and a Chinese slowdown, share prices in all major markets have seesawed violently, but at the time of writing have staged a significant recovery to the point where major markets are only in slightly negative territory for the year to date. However, this is not a time for active chopping and changing: sensible investors who want to sleep at night must stay focused on their long term aims and aspirations.
It’s hard to isolate the biggest worry besetting investors, but it is probably China, and the threat of a slowdown there derailing the global recovery. This fear is ill founded: China is not the locomotive of global growth (the US is), and for the UK, exports of goods and services to China account for around 5% of the total. And things are not that different in the opposite direction: of the half million or so new jobs created in the UK last year, fewer than 5,000 were by Chinese firms.
China is slowly but surely making the inevitable transition from a construction led miracle to a more consumer driven economy. As the Chinese economy grows in size, it is a simple inevitability that the year on year rate of economic growth will moderate to more modest numbers – straightforward arithmetic says it cannot be otherwise.
The sooner that investors realise that a lower and more sustainable growth rate in China would in actual fact be better for everyone, then the quicker this particular worry can be crossed off the list.
Courtesy of Bordier & Cie (UK) PLC
Summer Budget 2015 HMRC Notes
|Posted on 09/07/2015|
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Greece is the word
|Posted on 03/07/2015|
The twists and turns of Greece’s plight have been a significant distraction for markets this year, and as this is written the country continues to teeter on the brink of defaulting on its loans to creditors and being expelled from the eurozone. Whether it will survive or not is still too difficult to call, particularly when the leaders of Germany and France, the two most exposed countries to Greek debt, are quite rightly fighting to defend their own financial corners. But with the authorities making further reassurances that they will do all they can to protect the financial stability for Greek citizens, and both sides seemingly wanting Greece to remain a member of the euro area, then some deal will hopefully be struck soon.
What is the likely impact on stockmarkets? We expect stockmarkets to remain quite twitchy as the prospects of a satisfactory outcome wax and wane. However, these volatile conditions should allow the active stockpicker the opportunity to find cheap and attractive longer-term opportunities in a region where economic recovery is now gaining some solid momentum. It is reassuring, for example, that since the ECB began its Quantitative Easing programme earlier this year, European markets have largely detached themselves from the unfolding Greek saga, a sign that there is a deeper determination within markets to contain any contagion. Indeed, contagion risk is probably more psychological in nature than real: a Grexit in isolation is too small to derail the nascent recovery in Europe, and in the USA too, latest economic data point to accelerating growth.
This current bout of turbulence is not prompting us to make any changes in our asset allocation. In due course investors will refocus on the more positive aspects of the wider eurozone’s economic revival and the generally benign outlook for world markets.
Courtsey of Touchbutton 0 Bordier & Cie (UK) Plc