The dangers of DIY
by Andrew Hardy, CFA
Thanks to our global client base we have the opportunity to meet advisers and institutional investors with a very varied mix of underlying client types. Some live in countries that have a very well-established investment culture and others are more nascent. Regardless of which environment our end users are used to, the allure of investing on your own, without professional help, is always present.
Market Snapshot
- Coronavirus concerns dominated sentiment again, with markets falling strongly today
- Markets turn increasingly risk-off in light of global data releases
- Brent crude rose 2.1% ending the week at $58.5 a barrel
- Gold rose 3.7% ending the week at $1643.4 an ounce
Who cares wins
by Andrew Hardy, CFA
Nobody could have missed the global awakening to the debate on climate change over the past year. The greater frequency of extreme events – fires, storms, flooding – as well as the increased visibility of movements like Extinction Rebellion have been key driving forces behind this, although the heightened attention is long overdue. Within the investments industry this has translated into a marked increase in demand for strategies that focus on sustainability; an inexorable trend that the whole industry needs to adjust for.
Market Snapshot
- Most equity bourses ended the week in positive territory
- Coronavirus concerns dominated sentiment again, but containment confidence grew
- Brent crude rose 5.2% ending the week at $57.2 a barrel
- Gold rose 0.9% ending the week at $1583.7 an ounce
Opportunities to leapfrog in Emerging Markets
by David Lashbrook, CFA
Having personally experienced how the mobile telephone has transformed communications and enabled business in Africa, I wonder if the combination of poor existing infrastructure and technological advancement could transform the retail sector in emerging markets. Just as Kenya-based Safaricom has led the world in mobile money transfers, I wonder if there is an opportunity for Africa to pioneer retail delivery via drone.
Market Snapshot
- The Coronavirus continues to occupy major news headlines and investor sentiment
- The US impeachment saga ended on Wednesday as the Senate voted to acquit President Trump
- Brent crude fell 6.3% ending the week at $54.5 a barrel
- Gold fell 1.2% ending the week at $1570.4 an ounce
Unknown unknowns: the coronavirus
by Michael Clough
When we talk about risks to our investment outlook, we always warn of the threat of ‘unknown unknowns’, events that come seemingly out of nowhere that can’t be predicted or planned for. All we know is at some point they will arise. As all readers will be aware, two have already arisen in the early stages of 2020, firstly with the tragic incident in Iran when a civilian plane was shot down and secondly with the outbreak of the new coronavirus in China. Understandably, we have received numerous queries from clients, notably on the latter, and this Global Matters Weekly seeks to clarify our current stance on recent events.
Market Snapshot
- The UK departed from the European Union on Friday, after more than 47 years of membership
- Global markets continued to fall as the coronavirus concerns dominated sentiment
- Brent crude fell 4.2% ending the week at $58.2 a barrel
- Gold rose 1.1% ending the week at $1589.2 an ounce
As the year began, so it ended, with yet another strong month for risk assets in December, capping one of the best years for markets since the financial crisis. Equities again led the charge, but leadership for once slipped from the US to emerging markets, which returned 7.5% in the month, well ahead of the US and MSCI World with 3.0% returns. This resulted in full year returns for the US of 30.7%, MSCI World 27.7% and MSCI Emerging Markets 18.4%. The ‘risk on’ environment led to safe haven government bonds weakening while high yield and emerging market bonds produced gains of 2.0-3.0%, with annual gains of 14.3% (US high yield) and 12.6% respectively.
Markets are heading into the final weeks of the year with some extraordinary gains for the year to date. November proved to be another strong month for risk assets, led by equities and in particular the US, up 3.6% for the month, taking its return so far this year to 26.9%. The contrast with the fourth quarter of last year, when Wall Street fell 20%, could not be more stark, and reflects to a large degree the policy pivot by the Fed, followed by other central banks, from tightening to easing policy. Markets have shrugged off the sharp downturn in global trade and manufacturing, as well as a tough year for corporate profits, which have been broadly flat, and have recovered all the ground lost in that sharp setback of Q4 2018. While the US has led the way and has reached a new all-time high other equity markets have also performed well: Europe ex UK gained 2.6% in November, 25.1% this year so far, while even the laggards among developed markets, Japan and the UK, have gained 16.4% and 13.3% respectively this year, after solid returns in November. The MSCI World index, dominated as it is by the US, was up 2.8% in the month, 24.0% year to date.
