The shape of the economic recovery is highly uncertain and in our view will depend on five aspects.
Low yields environment is a challenge for investors
- Lack of inflationary pressure is set to continue given the recession – rates are likely to remain ‘lower for longer’ given the weak economic backdrop
- Tax rates will increasingly come to the forefront as a way to fund the expanding fiscal spending being discussed
Geopolitical risks remain omnipresent
- US-China trade tensions are here to stay – this remains a geopolitical focus for both nations
- Brexit risk – a threat that has moved out of market focus temporarily because of the pandemic crisis – remains sizeable given uncertain shape of agreement with the EU, with negative implications for both the UK and the EU should there be no agreement
- US elections will be the wild card – the result could be highly uncertain given the socio-economic backdrop
- The world has become ever more disruptive and will continue to lead to deflationary pressures as a result
- Cyber security is likely to take centre stage in corporates’ focus and spend – especially given the acceleration to online activities from the forced lockdowns
Optimism and opportunity
- Equity valuations are less supportive versus the historic average after the sharp rally from the lows, but still supportive versus bonds for long-term investors, especially considering the elevated equity risk premium
- Style leadership in the market is to remain a talking point given the extended valuation spread between ‘Growth’ and ‘Value’
- ESG and sustainability takes centre stage with corporates and investors, especially given the global impact the pandemic crisis is having on the workforce
Regulatory information and risk warnings
This information is issued and approved by Martin Currie Investment Management Limited (‘MCIM’). It does not constitute investment advice. Market and currency movements may cause the capital value of shares, and the income from them, to fall as well as rise and you may get back less than you invested.
The information contained in this presentation has been compiled with considerable care to ensure its accuracy. But no representation or warranty, express or implied, is made to its accuracy or completeness.
This document has been prepared for professional investors, it is intended for the recipient only and may not be distributed to third parties. The document does not form the basis of, nor should it be relied upon in connection with, any subsequent contract or agreement. It does not constitute, and may not be used for the purpose of, an offer or invitation to subscribe for or otherwise acquire shares in any of the products mentioned.
Past performance is not a guide to future returns.
The distribution of specific products is restricted in certain jurisdictions, investors should be aware of these restrictions before requesting further specific information.
Martin Currie has procured any research or analysis contained in this document for its own use. It is provided to you only incidentally, and any opinions expressed are subject to change without notice.
The views expressed are opinions of the portfolio managers as of the date of this document and are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. These opinions are not intended to be a forecast of future events, research, a guarantee of future results or investment advice.
Please note the information within this report has been produced internally using unaudited data and has not been independently verified. Whilst every effort has been made to ensure its accuracy, no guarantee can be given.
Some of the information provided in this document has been compiled using data from a representative account. This account has been chosen on the basis it is an existing account managed by Martin Currie, within the strategy referred to in this document. Representative accounts for each strategy have been chosen on the basis that they are the longest running account for the strategy. This data has been provided as an illustration only, the figures should not be relied upon as an indication of future performance. The data provided for this account may be different to other accounts following the same strategy. The information should not be considered as comprehensive and additional information and disclosure should be sought.
Risk warnings - Investors should also be aware of the following risk factors which may be applicable to the strategies.
Investing in foreign markets introduces a risk where adverse movements in currency exchange rates could result in a decrease in the value of your investment.
Emerging markets or less developed countries may face more political, economic or structural challenges than developed countries. Accordingly, investment in emerging markets is generally characterised by higher levels of risk than investment in fully developed markets.
The strategies hold a limited number of investments. If one of these investments falls in value this can have a greater impact on the portfolios’ value than if they held a larger number of investments.
The strategies may invest in derivatives (Index futures and FX forwards) to obtain, increase or reduce exposure to underlying assets. The use of derivatives may restrict potential gains and may result in greater fluctuations of returns for the portfolios. Certain types of derivatives may become difficult to purchase or sell in such market conditions.
For institutional investors in the USA:
The information contained within this presentation is for Institutional Investors only who meet the definition of Accredited Investor as defined in Rule 501 of the United States Securities Act of 1933, as amended (‘The 1933 Act’) and the definition of Qualified Purchasers as defined in section 2 (a) (51) (A) of the United States Investment Company Act of 1940, as amended (‘the 1940 Act’). It is not for intended for use by members of the general public.
For wholesale investors in Australia:
This material is provided on the basis that you are a wholesale client within the definition of ASIC Class Order 03/1099. MCIM is authorised and regulated by the FCA under UK laws, which differ from Australian laws.