DIY Investor Magazine
| August 2017
6
THE BIG PICTURE: ECONOMIC
AND POLITICAL SUMMARY FROM
QUOTEDDATA
Every month here at QuotedData, the investment trust analysts collate the insights on markets and economics taken from
comments made by chairmen and managers of investment companies investing across the globe. We organise these to
highlight what the sectors’ trusts believe are the factors relevant to performance in their particular geography or industry sector.
GLOBAL
After last month’s distinctively pessimistic tone,
commentators seem more upbeat, typically justifying
equity valuations on improving fundamentals.
Peter Hewitt,
manager of
F&C Managed Portfolio,
suggests that political uncertainty may be obscuring
improvements in underlying economies. He favours
Europe, Asia Pacific and Emerging Markets overthe
more highly rated US market.
Richard Killingbeck,
chairman of
Bankers
, is
cautiously optimistic, saying the picture for revenue and
earnings growth is more positive than for some time.
Lucy MacDonald
, manager of
Brunner
, echoes this,
saying that the good momentum of analysts’ corporate
earnings estimates is a good signal for the stock
markets.
Simon Fraser,
chairman of
Foreign & Colonial,
concurs and believes rates rises should be modest. The
folks at
Alliance Trust
expect higher levels of volatility.
Dr Poh
l, chairman of
Athelney
, is more cautious and
favours capital preservation.
UNITED KINGDOM
UK commentators seem cautious overall. The election
result could mean a greater chance of a soft Brexit. Rate
rises are coming. A more normal economic environment
could favour value investors
Andy Pomfret
, chairman
of
Miton UK MicroCap
, says corporates have been
prioritising buy-backs and dividends over long-
term capex. The managers of that fund highlight the
stagnation of worldproductivity and say it is important
to identify companies investing in attractive capex
opportunities.
Duncan Budge,
chairman of
Artemis Alpha
expects
unsettled conditions for at least the next couple of years.
The managers of that fund think the election result has
made a soft Brexit more likely.
They also make the point that many companies have
been flattered by currency moves since the referendum,
masking weak underlying performance.
Crispin Latymer,
chairman of
BlackRock
Throgmorton
, thinks a rate rise is likely although any
increase is expected to be gradual to avoid unsettling
markets. The managers of that fund say the potential for
further political surprise or economic setback, coupled
with high valuations, may curb any upside.
Alastair Munday
, manager of Temple Bar, looks
forward to rate rises and the unwinding of QE – he
believes central bankers are dropping hints that this is
on the cards.
He thinks that would help value investors.
Paul Trickett,
chairman of
Aberforth Smaller Companies
, sees a
greater synchronisation of recovery among individual
economies than at any point since the financial crisis –
the global policy response could have a greater long-
term significance than the UK’s domestic issues.
The managers of that fund say the actions and
comments from central banks in the last week of June
suggested concern about reflationary pressures and
a more hawkish stance on monetary policy. They also
think that markets have become overly fearful of volatility
and illiquidity.
