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2020 Global Investment Outlook

Ho! Ho! Ho! or Bah, Humbug?

Thanks largely to the US Federal Reserve doing an abrupt 'U' turn on rates, and with other central banks also adopting accommodative policy responses, most asset classes have provided investors with positive returns and some seasonal festive cheer. But will Scrooge appear sometime next year (in the shape of a recession) to put a damper on things? Investment teams have been busy recently, creating their 2020 Global Investment Outlook forecasts, doing their best to provide investors with their versions of the ‘Christmas Yet to Come’...

Commentators are finding it challenging to peer through the blizzard of issues that include geopolitical risks, slowing global economic growth, potential recession and any fiscal or monetary responses that may present themselves in 2020.  However, the storm has abated sufficiently for this collection of papers to outline some of the potential risks that investors should consider, while also suggesting where potential opportunities might lie, in what may prove to be another testing year.

2020 number on wall

 

2020 INVESTMENT OUTLOOK


2020 Outlook: Expecting the Unexpected (UBS AM)

In their 20-page investment outlook for 2020, UBS Asset Management focuses in on some of the potential risks and opportunities that lie in wait for investors in 2020. 'Staying flexible and nimble' is their mantra.

2020 Economic Outlook: A Battle of Three Cycles (PineBridge, Nov 2019)

Pinebridge Investments’ Chief Economist Markus Schomer offers his view of the global outlook for 2020. He sees three forces likely to dominate: the macro, monetary policy and political cycles.

2020 Long-Term Capital Market Assumptions (Invesco, 2019)

For compliance reasons, this paper is only accessible in certain geographies

In this paper by Invesco, they offer their latest, long-term global estimates for the major asset classes. The estimates are based on a 10-year investment time horizon and are provided to assist with strategic asset allocation. The document also summarises significant recent changes in return estimates.

Outlook 2020: A Tale of Two Scenarios (Robeco, Nov 2019)

Robeco’s annual outlook paper offers two potentially contrasting views for 2020. The first thesis suggests that the expansion in global economies lasts a little longer, providing some support for the equity bull market to continue a little longer. The contrary view is that earnings and GDP growth plateau earlier than anticipated and a recession does occur.

Global Insight 2020 Outlook (RBC WM)

RBC’s Wealth Management strategists are cautiously optimistic on the prospects for equities in 2020, though they also caveat that this is the most bearish they have been in the past decade. Their positive outlook is based upon accommodative monetary policies, an easing in or resolution to US-China trade tensions, and the belief that developed economies will deliver some fiscal stimulus.

2020 Commercial Real Estate Outlook (Deloitte)

For Deloitte’s 2020 outlook for the CRE market, they surveyed 750 industry professionals across 10 countries to gauge to what extent emerging technologies and analytics are impacting upon location decisions and how they might make a more memorable tenant experience.

Video: 2020 Economic Outlook - A Battle of Three Cycles (PineBridge, Nov 2019)

In this 5:51 video clip, Pinebridge’s Chief Economist Markus Schomer outlines his outlook for next year, which he believes will be shaped by the interaction of the macro cycle, the policy cycle and the political cycle. 

2020 Capital Market Assumptions (Verus Investments)

Versus Investments presents their 2020 Capital Markets Assumptions in which they analyse market movements during 2019, and how these changes have impacted upon their long-term outlook. A 46:30 webinar is also available.


GLOBAL STRATEGY


The Survivability of the Euro (Invesco)

For compliance reasons, this paper is only accessible in certain geographies

Working in conjunction with Jacek Rostowski, the former Finance Minister of Poland, Invesco considers a number of vital, medium-term issues impacting the euro and the EU.

Debunking the yield curve as a ‘super-forecaster’ of recessions (BNP Paribas AM)

BNP Paribas argues that investors should be sceptical of the popular perception that the yield curve is a ‘super-forecaster’ of recessions.

Guide to Recessions: What to look out for and how to prepare (Capital Group)

For compliance reasons, this paper is only accessible in certain geographies

Recessions are hard to predict, and this guide does not attempt to do so. However, this paper does tell investors what they should be looking for and how they should prepare for the inevitable.


OTHER OUTLOOK PAPERS


The Night Shadows: Investing in fixed income if recession hits (Robeco blog, Nov 2019)

In this Fixed Income Outlook for 2020, Jamie Stuttard, Robeco’s Head Global Macro Fixed Income Team outlines his views and explores the opportunities and risks, should a recession occur.

Fiscal policy: a game changer for markets in 2020? (NN IP, Nov 2019)

NN Investment Partners' paper proposes that the outlook for 2020 is delicately positioned between geopolitical risks and any fiscal and monetary responses. As such, they assert that this creates a binary outcome, in which a moderate economic rebound may occur, or the economy enters a recession. Fiscal policy responses have potentially, a critical role to play.

Podcast: November's Rich Pickings - Outlook 2020 special (Fidelity Intl, Nov 2019)

For compliance reasons, this paper is only accessible in the UK & Europe

In this 37:30 podcast, Fidelity's Chief Investment Officers outline what they think investors should be considering as they look forward into 2020. The risks and opportunities for all major asset classes are discussed, and the contributors also offer their 'hot cakes and hot potatoes' suggestions. These are investment ideas which Fidelity CIO's think investors ought to consider and those which they believe are best avoided.

What’s a defensive stock in 2020? (Capital Group blog, Nov 2019)

For compliance reasons, this paper is only accessible in the UK & Europe

In this paper, three of Capital’s portfolio managers opine upon what they believe the characteristics of a ‘defensive’ stock to be. Investor opinion, as we enter 2020, is now somewhat divided, with the definition changing and evolving in recent years. They explore whether growth-oriented companies also have defensive characteristics, and whether a ‘value’ stock is not always a defensive one!

Global Real Estate Outlook (UBS AM, Nov 2019)

This Global Real Estate Outlook from UBS outlines that generally, real estate continues to provide positive returns, though these returns vary markedly by country. UBS’s core view is that returns are likely to converge to around 5% p.a. with little differentiation between markets. However, a key consideration for global real estate investors remains currency exposure and hedging costs which can have a significant impact on returns

Global Investment Forum: Key themes (BMO GAM, Dec 2019)

BMO GAM presents the findings from its annual Global Investment Forum (GIF) in which economists, strategists and portfolio managers focus on what they believe will be the significant factors driving markets over the medium term. Their core view is that the current economic cycle has further to run, and an imminent recession is unlikely.

U.S. Economic Outlook: Recession risk judged to be moderate (DWS AM, Nov 2019)

For compliance reasons, this paper is only accessible in the United Kingdom

DWS AM offers their perspective on the US economic outlook, in which they suggest that declining National Income and Product Accounts (NIPA) corporate profits may imply slower GDP growth in 2020. However, they do not believe that a recession occurs in the next twelve months. Risks, however, lie in how the trade tensions between the US and China play out.

 
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