News / Views

Investment Notes

Follow our regular updates to stay up-to-date with current financial planning and investment issues. We regularly publish press clippings, articles and thinkpieces that we think might be of interest to our clients.

In late January, we published our market outlook for 2016, in which we said we expected stock markets to make progress after a weak start to the year. Our view was that the recent unsettling news from China shouldn’t derail economic growth in the developed world and markets would recover.

2016 has started with a re-run of the challenges from the summer of 2015, as the fall in Chinese share prices and the yuan have undermined confidence in financial markets. As before, clumsy actions by the authorities appear to have sparked the situation.

Company shares have declined sharply in August, as developments in China sparked concerns for the global economy.
Both we and markets were surprised by the turn of events concerning Greece over the weekend. Our central assumption had been that an agreement would be cobbled together as deadlines began to bite, and we didn’t expect the Greek government to call a referendum; the subsequent sharp fall in European stock markets shows that other investors had a similar view. The question now is whether the reaction in financial markets is simply the volatility that arises when unexpected events occur, or whether there is a risk of a permanent loss of capital. We are taking an optimistic stance, expecting company share prices to recover; we don’t believe that events in Greece will derail the economic recovery in Europe and the West, for the reasons set out in this note. Meanwhile, we are likely to see more tragic scenes from Athens on the television news, as the crisis impacts everyday life.

Despite the increasing concerns of a Greek default and the additional volatility this has brought to most world markets, we believe that there is more global bloom than gloom; this note explains why current portfolio allocations should be maintained with company shares and commercial property predominating over cash and bonds.

QE moving the Eurozone towards recovery

The ECB announces new policy measures to stimulate the economy

Following the bout of weakness in October, which we commented upon in our note entitled “Keep Calm and Keep Shares”, and the subsequent recovery, company share markets have experienced further volatility, as we expected in the second half of this year (see our 10 July 2014 note entitled “A Quietly Profitable First Half ”).

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