Global Investment Outlook: Where to From Here?

Go East, Young Man

Despite the caveats of many commentators, equity markets continue to push further ahead. Most investors appear only to be looking only for the positives in economic releases and corporate earnings announcements, arguing that any downbeat data tends to be backwards looking.

As valuation differentials between Developed and Emerging Markets increase, a number of papers suggest that investors should consider the asset markets of the Asia-Pacific region. Meanwhile, as a divergent range of views on the future strength of the global economic recovery develops, other articles propose adjusting portfolios to leave enough flexibility to adapt to any of several different market scenarios. Whichever path you choose, we hope that this selection of papers helps to cast some light into dark places.

Market Views: Status quo or lengthy pain ahead? (Wellington Management)

Wellington Management’s Multi-Asset Strategist, Adam Berger, offers his suggestions of opportunities that exist within asset classes, while outlining three scenarios for future market direction that investors would do well to consider.

Secular Trends, Economic Recovery, Good for Stocks? (Janus Henderson, Aug 2020)

For compliance reasons, this paper is only accessible in the United States and Canada

Janus Henderson proposes that active investors should be alert to as yet unrecognised potential sources of return within equity markets that tap into either a secular growth story, or which are soundly capitalised and geared into economic recovery.

Uncertainties Ahead? Market Trajectory for H2 2020 (Candriam)

Candriam's paper identifies several potential risks which could affect markets in H2 2020. However, another black swan event is unlikely. Preference is given to Europe over the US (due to rising geopolitical risks as the US election approaches) and favouring Emerging Markets debt and equity markets are their suggestions for H2 2020.

Reviewing 2020 Risks (MetLife IM, Aug 2020)

MetLife IM update their macro strategy piece on the likely risks for 2020, amending their anticipated growth outlook and 10-year yield forecasts in light of the turbulence seen in markets in recent months.They highlight a number of risks which should be at the forefront of investor thinking.

Global Investment Views (Amundi, Aug 2020)

For compliance reasons, this paper is NOT accessible in the United States

The approval of a €750bn recovery fund in Europe and the likelihood of a further stimulus package in the USA helped propel markets higher. However, valuations look elevated despite a predicted recovery in company earnings next year. Consequently, Amundi suggests tactical rather than strategic changes to asset allocations.

Equity Market Stress Metrics Halfway Through 2020 (Intech blog)

For compliance reasons, this paper is only accessible in the United States and Canada

At the halfway point through 2020, Intech reviews where the dials are set on their Equity Market Stress Monitor and finds that a number of them appear to indicate that a degree of concern by investors might be warranted.

China's Economic Resilience (Matthews Asia blog, Jul 2020)

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

Matthew Asia’s Investment Strategist, Andy Rothman, notes positive economic data out of China for a fourth consecutive month. He suggests that provided COVID-19 outbreaks are controlled, the consumer growth prospects for the country look unparalleled.

Why It's Time to Look East (Baillie Gifford, Jul 2020)

Roderick Snell, Investment Manager at Baillie Gifford, argues that the Asia ex-Japan region could be a prime beneficiary of secular growth trends already in place and now accelerated by the COVID-19 crisis. Unlike most Western economies, fiscal stimulus packages required to revive flagging economies are a rarity, leaving the region unencumbered by debt and better placed to take advantage of economic recovery.

Asia Market Outlook: H2 2020 and 2021 (UBS AM, Aug 2020)

UBS AM suggests that the relative attractiveness of Asia's equity and bond markets should interest investors. Asian equities look cheap on significant discounts to Western markets. In bond markets, credit spreads are the widest since the Global Financial Crisis (GFC), and both high yield and investment grade names offer better yield and lower duration than Western markets.

APAC Real Estate Outlook (M&G Investments, Jun 2020)

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

M&G Investments notes that APAC real estate landlords face many of the same challenges evident in London and New York. Structural trends have been accelerated, particularly in e-commerce, retail and logistics, while offices may face an existential crisis and need to evolve to meet changing needs.

Gold Demand Trends: Q2 and H1 2020 (World Gold Council)

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

World Gold Council notes that overall demand for gold dropped by 6% in H1 2020, as consumer and industrial demand faltered. However, record inflows into gold backed ETFs as a store of value and inflation hedge helped to mitigate the worst of the downturn.

Monthly Market Monitor (Eaton Vance, Aug 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

Eaton Vance’s Monthly Market Monitor gives a comprehensive view of where markets have been and where they are now, while also offering a number of asset allocation ideas.

Asset Allocation: Surfing the waves (NN IP blog, Aug 2020)

In this article by NN Investment Partners, they review markets’ recent performance, then proceed to provide a comprehensive prognosis of the economic outlook, the likely progression of markets and some helpful asset allocation suggestions.

Investment Strategy Insights: (PineBridge Investments blog, Aug 2020)

PineBridge Investments suggests that the recent €750 billion EU recovery fund agreement could be a potential watershed moment, particularly for European markets. Optimists see the deal as having long-term positive implications for European currency and financial markets stability, whilst also helping to improve Europe’s global competitive position.

COVID-19: The great compression (Invesco, Aug 2020)

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

Invesco’s Global Macro Strategist, EMEA, Arnab Das, offers a model of three scenarios with five roadmaps to recovery. It reflects the interaction between the COVID pandemic progression, public health and fiscal responses as well as how the consumer reacts to lockdowns, including the unlocking and re-imposed restrictions.

Investment Traffic Lights (DWS, Aug 2020)

In their Monthly ‘Traffic Lights’ paper, DWS provides a recap of what has recently happened in markets and then provides an economic and market outlook and how that might impact their optimal asset allocation.

The Three Stages of the Global Economic Recovery (Manulife blog, Jul 2020)

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

A three-stage global economic recovery is how Manulife sees things shaping up. Each time frame has its own implications for markets, economic policies and asset allocations - but irrespective of where in the recovery we are, they argue that the road ahead is likely to be a much bumpier one than that just travelled.

Q3 2020 Investment Landscape (Verus Investments)

Verus Investments offers its review of the key metrics and drivers of major asset markets performance during Q2 and imparts selected insights as to what might affect them in the latter part of the year.

Joe Zidle: Considerations for the New Business Cycle (Blackstone blog, Aug 2020)

Blackstone’s Joe Zidle offers his occasional thoughts on the new and challenging environment which companies find themselves in post COVID-19.

Q3 Outlook: Optimism versus reality (LGIM, Jul 2020)

For compliance reasons, this paper is NOT accessible in the United States and Canada

The striking disconnect between Main St. and Wall St. is highlighted by LGIM, where they note equity market valuations already assume a substantial rebound in corporate earnings. They believe that after an initial post lockdown bounce in economies, reality might begin to bite and growth weaken again once furloughed staff lose government support.