Pre-crisis normality remains a distant hope, Jupiter Primadona says
Each month QuotedData publishes a collation of the views of Chairmen and investment managers in the investment companies sector. The views of these experts make for interesting reading – and you can read the full report on their website – but, for your convenience, we have summarised the full report here.
Global View – cautious optimism
Tom Bartlam, Chairman of Jupiter Primadona, is cautiously optimistic despite significant geopolitical risks and too much leverage in the world’s economic system. Primadona’s managers, Richard Curling and Derek Pounds, point to Mario Draghi’s readiness for greater market intervention in Europe as evidence that the “normality” of the pre-crisis world remains a distant hope. Mark Sheppard, manager of Manchester & London, believes stock markets may grind higher, supported by the Fed, the ECB and a savings glut. He is also looking for an uptick in M&A activity.
UK – focus on coming rate rises
Lord Flight, Chairman of Aurora, believes the UK could be the first major economy to withdraw monetary stimulus, followed by the US but foresees interest rates remaining low by historical standards. SirLaurence Magnus, Chairman of JPMorgan Income & Capital, thinks monetary measures supporting growth suggest an overweight position in equities remains appropriate. John Baker & Sarah Emly, managers of the JPMorgan fund, think coming UK interest rate rises may take some froth out of the housing market and trigger some market volatility.
Europe – buying opportunity?
Carol Ferguson, Chairman of BlackRock Greater Europe, believes ECB policy should provide a positive catalyst for markets. Her managers, Vincent Devlin and Sam Vecht, say a triple-dip recession in Europe is unlikely and believe European equities are extreme cheap on long-term metrics. Tim Stevenson, manager of Henderson Eurotrust, says international investors’ frustration with Europe could provide a good opportunity for those with greater reserves of perseverance. Ollie Beckett, manager of TR European Growth, says the recovery in Europe is not over yet. He cites Draghi’s efforts to stimulate bank lending as one reason for optimism. He is also expecting an uptick in M&A activity.
USA – reasons to be cheerful
Robert Siddles, manager of Jupiter US Smaller companies is upbeat about the long-term prospects for the US economy, driven by three tailwinds of shale reserves, superior demographics and revitalised manufacturing competitiveness.
Asia – supportive demographics
Both Nigel Cayzer, Chairman of Aberdeen Asian Smallers, and his management team believe that the region’s demographic profile should be supportive of domestic consumption growth.
Japan – corporate governance improvements
Sarah Whitley, manager of Baillie Gifford Japan, says Government efforts to boost inflation, if successful, should benefit equities. She is also encouraged by improving attitudes to corporate governance in the country and says that managements are focusing more on shareholders. The management team behind Schroder Japan thinks that the latter point in combination with further easing by the Bank of Japan and attractive valuations, make for a supportive backdrop for the stock market.
Vietnam – FDI and China
Steven Bates, Chairman of VinaCapital Vietnam Opportunities, says a healthy Chinese economy is key to Vietnamese economic prospects but believes Chinese growth is recovering. He is also expecting greater foreign direct investment in Vietnam.
Emerging Markets – short-term uncertainty
Andrew Hutton, Chairman of JPMorgan’s Global Emerging Market Income trust, believes the outlook for emerging markets is far from clear, saying the operating environment in emerging market economies is tough. His counterpart at JPMorgan Emerging Markets, Alan Saunders, thinks we are not out of the woods yet with regard to volatility in emerging markets but we appear to be moving in the right direction. Austin Forey, the manager of the latter fund, takes a longer term view and he is upbeat, asking; How can there not be great investment opportunities in an asset class which covers most of the world's population and a large and rising share of the world economy?
Private Equity – secondary market driven by banks
Tom Bartlam, here in his guise as Chairman of Pantheon, says easy availability of credit and buoyant equity markets have created a positive environment for realisations but this can also lead to an increase in leverage risk. The Pantheon team give a comprehensive run down on the state of the private equity market and highlight the impact of the Volker rule on banks, which they say should drive secondary deal volume as banks dispose of their private equity positions.
Debt – look for signs of recovery
Ian Francis, manager of New City High Yield, suggests we look for signs of more companies entering default as this is associated with an economy in early/mid recovery phase.
NB: This note was prepared by Marten & Co for QuotedData using publicly available information. Marten & Co is authorised and regulated by the Financial Conduct Authority. This is not advice. Nothing in this note is intended to encourage the reader to buy or sell the securities mentioned within it.