Monthly Market Update - April 2019

Read our full Monthly Market Blueprint April 2019

  • The global economic slowdown persisted, with conditions in the manufacturing sector contracting, especially for exporters. However some improvement in the service sector, and evidence of inventory depletion give hopes for cyclical economic rebound. Meanwhile trade wars, Brexit uncertainty, weaker Europe and growing suspicions of a sharper than anticipated Chinese slowdown, along with the fact that the cycle is entering its tenth year, continue to unnerve investors, but for the first quarter of the year, we have not experienced a profound bout of equity volatility such as the one that rocked markets last December.
  • Asset allocation was marginally negative while fund selection was a more significant detractor in March. With Fixed Income the best performing asset class and Equities also rallying, our underweight position in Bonds and overweight in Alternative assets cost around -0.2%. However, our underweight position in UK MID-Cap Equities, which actually fell while equities rallied in virtually all other areas, dampened the loss.
  • Given the extent of uncertainty surrounding Brexit we remain cautious on the UK. However, in April’s investment committee we decided to rebalance our portfolios and eradicate our long standing underweight in the GBP, as we now feel that there’s significant GBP upside, as Brexit tends toward either resolution or deferment, both of which are Pound-positive events. We don’t maintain strong geographical preferences at this point, awaiting for more visible catalysts going forward. We still believe that the cycle, for the time being, remains intact but it is showing increasing signs of maturity.

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