Page 6 - DIY Investor Magazine February 2018

THE BIG PICTURE: ECONOMIC AND POLITICAL SUMMARY FOR JANUARY 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
Donald Trump’s tax reforms were well received by US corporates. Markets hit new highs in December; UK was particularly strong with a good performance from mining and energy stocks (on the back of a higher oil price) as global growth picks up.
GLOBAL
Faster growth in economies and earnings seems to be making commentators more optimistic but are investors complacent about risk?
James Will of Scottish Investment Trust notes that policy responses to populism have been seen in a positive light by markets but believes there are signs of complacency in investors’ attitude to risk.
Katy Thorneycroft of JPMorgan Elect Managed Growth says that recession risks are muted, and global earnings upgrades and loose financial conditions are supportive for stocks.
Seneca Global Income & Growth believes inflationary pressures will remain fairly benign, allowing central banks to stay essentially accommodative. Peter
Ewins of F&C Global Smaller Companies believes favourable economic conditions should be reflected in company results. Nick Greenwood of Miton Global Opportunities finds it hard to imagine meaningful interest rate rises but wonders whether investors may be less inclined to lend to highly indebted nations, individuals and corporations.
UNITED KINGDOM
Norman Yarrow of Dunedin Smaller Companies
cautions that valuations of good quality companies are elevated and that equity valuations are vulnerable if growth slows. Jonathan Cartwright of BlackRock
Income & Growth, points out that two thirds of revenues for companies listed in the UK come from overseas.
Carolan Dobson of Schroder UK Growth notes
that the UK market’s rise has been concentrated in a relatively small number of sectors; James Henderson and Laura Foll of Lowland think UK inflation may stay high for longer than forecast and interest rates may rise further than expected.
Katy Thorneycroft of JPMorgan Elect Managed Cash disagrees, noting weakness in the housing market, consumer confidence and retail sales; Steven Bates of F&C Capital & Income believes that many UK businesses will prosper regardless of the Brexit outturn.
Thomas Moore of Standard Life Equity Income small and mid-cap companies offer superior dividend growth prospects than large-cap companies; Ciaran Mallon
of Invesco Income Growth, cautions that sterling could strengthen but sees recovery potential in Brexit-hit stocks.
Robert Talbut of Shires Income thinks markets may be more volatile with elevated valuations and a number of potential political and geopolitical flashpoints; Andy Pomfret of Miton UK MicroCap thinks micro-caps will become more attractive as the UK economy slows. Nick Train of Finsbury Growth & Income urges investors to look through macro-economic and political issues and trust that things will work out fine in the end.
DIY Investor Magazine | Jan 2018 6