- Global Investment Views - January 2020
Global Investment Views - January 2020
Monday 30 December 2019
Research / Market
Global Investment Views - January 2020 - CIO Views
The combination of these trends enabled a traditional 50 bond/50 equity balanced portfolio for European to investors generate 15.5%, the best annual performance in the last two decades. However, 2019 also saw some less exciting records on economic and geopolitical fronts – a high world uncertainty index reading (Brexit, Trump impeachment process and trade war escalation). Debt skyrocketed, CO2 emissions rose and social discontent erupted in many countries. Overall, global growth decelerated, inflation failed to reach Central Banks’ (CB) targets and vulnerabilities continued to build. The big disconnect in market performance and a fragile economic environment is partially the result of re-rating of market valuations and the big shift in CB policies. Various forms of monetary accommodation have eased the financial conditions witnessed at the beginning of 2019.
U.S. inflation… what’s up?
From the CPI data, in particular the HCPI, one would get the sense that inflation has decelerated and stabilised somewhat.
Time for a flight to cyclical value in European equity
When we look fundamentally at the risks and rewards in equity markets for 2020, we find that value offers better opportunities than growth as implied expectations are lower and therefore more attractive for value at this point. The performance of value vs growth has been on a downward trend for a long time, almost 13 years. In our view, the rotation towards value that started in September 2019 is likely to continue in 2020.European equities will benefit from this rotation; Europe is a value market as it is more skewed towards the traditional value sectors of financials, telecoms, mining and utilities, while being underweight in the hyper-growth segment of information technology (IT). In the past, rotations from growth to value have been more pronounced in Europe than the overall global market.
Global Investment Views - April 2019
Risky assets have been in a very strong uptrend since the beginning of the year. The key question now is, where do we go from here? There are two main driving forces to focus on in the current context.