DIY Investor Magazine
| Oct 2017
6
THE BIG PICTURE: ECONOMIC & POLITICAL
SUMMARY FOR OCTOBER 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 sector’s trusts believe are the factors relevant to performance in their particular geography or industry sector.
ROUNDUP
Most markets fell; notabably, emerging markets gave
up some of their summer gains.
Sterling bounced vs the US dollar and was stronger
against most currencies.
Oil was strong as the International Energy Agency
(IEA) raised its projections for demand.
Gold eased a little.
The Bank of England hinted about raising rates
which hit gilt yields.
GLOBAL
Diverging views on inflation, worries about consumer
debt and the unwinding of quantitative easing.
Ruffer Investment Company
says inflationary risks
are rising.
Geoffrey Howard-Spinks
at
New Star
Investment Trust
thinks that inflation rises are likely to
be modest and deflationary forces may hold inflationary
pressures at bay.
Peter Burrows UIL
sees low wage
inflation as a positive for investment markets.
Tom Walker of Martin Currie Global Portfolio
is
concerned about increasing consumer debt;
Mid Wynd
is not gloomy as they don’t think equities are overvalued
and that debt levels are manageable.
Highbridge Multi
Strategy
warns that the unwinding of QE may not result
in an orderly transition.
UNITED KINGDOM
Brexit, interest rates, inflation, QE, and domestic politics
are all highlighted by commentators. A few managers
are optimistic, however.
Allister Langlands of Standard Life UK Smaller
Companies
says the full implications of the Brexit
decision will take time and that views on the outcome
of Brexit talks will become increasingly fraught;
Tom
Bartlam of Jupiter UK Growth
believes that investor
sentiment has been impressively resilient in the face
of Brexit negotiations and its manager
Steve Davies
believes Mrs May is here to stay and that investors
should not ignore the possibility of a chaotic, cliff-edge
Brexit.
Neil Honebon
of Murray Income cautions that there will
be casualties as rates rise and that the balance of risk is
on the downside; the managers of
Invesco Perpetual
UK Smaller Companies
think rate rises will be very
gradual.
Rupert Barclay of Sanditon
thinks unwinding QE may
weigh on equity markets;
Simon Fraser of Merchants
Trust
agrees that valuations are still reasonable and
sees opportunities in retail, leisure and financials.
JPMorgan Mid Cap
is optimistic that interest rates will
remain at rock bottom for some time;
Philip Remnant of
City of London
suggests investors in search of income
look to large cap equities.
Michael Hughes of JPMorgan Mid Cap
favours mid
cap stocks for more reliable income;
Tim Chapple at
Aurora
is concerned about government interference
in the UK housing market;
Robert Lister of Aberdeen
Smaller Companies Income
implies that higher
inflation needs to be factored into investment decisions;
Mercantile
is most worried by the geopolitical
landscape, worrying that markets may become more
volatile
GLOBAL EMERGING MARKETS
Frontier markets are attractively valued but there is
some nervousness about emerging market valuations.
Aberdeen Frontier Markets
highlights the average
30% valuation discount that its markets trade at,
compared to developed market equities.
