Investment Comment July 2013
12th July 2013
Developed equity markets, particularly the US and Japan, have continued to do better than emerging markets in the second quarter, and we think that trend will continue in the months ahead.
The fear of a withdrawal of quantitative easing sooner rather later led to a correction in the stockmarkets of the world last month, but Ben Bernanke has reassured markets by stating that highly accommodative monetary policy will be required for the foreseeable future. Mark Carney, the new Governor of the Bank of England, has said that interest rates will not rise as soon as some expected. The result has been a rebound in the stockmarket.
There are signs of an upturn in some cyclical sectors, such as shipping, where the worst may be over as freight rates show signs of improving. Company results continue to be mostly positive, with strong trading statements recently from Kier, in the building sector, and Associated British Foods, which owns Primark.
Overall, we continue to think the bull market in equities has further to go, and we think commercial property is beginning to benefit from the recovery. The fear of rising interest rates has receded somewhat, but we remain cautious about fixed interest investments.
As always, it is important to have a balanced portfolio, invested in all the major asset classes, in line with your objectives and attitude to investment risk. Any changes in asset allocation should be gradual, because of the difficulty with precisely timing the markets.