economic and political review


A collation of recent insights on markets and economies taken from the comments made by chairmen and investment managers of investment companies – have a read and make your own minds up. Please remember that nothing in this note is designed to encourage you to buy or sell any of the companies mentioned.




Emerging markets were quickest out of the gates in January, building on a strong 2020. The oil price was stronger too. 10-year bond yields in the US and UK rose were up, after hitting record lows last year, pushed on by improving sentiment tied to vaccines, and the prospect of more stimulus in the US especially. Elsewhere, the growing power of organised retail investors in the US, was one of January’s main themes.




Biden presidency should ease trade tensions


Sue Inglis, chair of Bankers, looks at what to expect as Joe Biden begins his presidency. She notes that with the likely exception of China, trade tensions should ease, resulting in lower market volatility.




Severe tests remain for corporates 


The manager of Aberforth Smaller Companies makes the point that the consensus view is that yesterday’s winners will be tomorrow’s winners and there is little questioning of taut valuation stretches between and within markets.

Neil Hermon, manager of Henderson Smaller Companies, says that in the corporate sector, conditions are intrinsically stronger than they were during the financial crisis of 2008-2009. Balance sheets are, in particular, more robust. However, he adds that the scale of economic shock means that this ‘strength’ will be severely tested and key questions for investors today revolve around a company’s available liquidity, leverage, bank covenants and ability to see the economic downturn through.


North America


Are we nearing the end of the almost 40-year bull market in US bonds? 


Baillie Gifford US Growth’s manager recaps on an excellent year for the fund, with a review of the areas of the healthcare and technology sectors it invests in.

The manager of Gabelli Value Plus+ says that we are probably in the final innings of an almost 40-year bull market in US bonds.

Baillie Gifford US Growth’s manager recaps on an excellent year for the fund, with a review of the areas of the healthcare and technology sectors it invests in.

The manager of Gabelli Value Plus+ says that we are probably in the final innings of an almost 40-year bull market in US bonds.


Capital markets reform has accelerated in China


Dave Nicholls, manager of Fidelity China Special Situations, notes that while there are variances between regions and sectors, overall, the economy continues to recover. The manager also discusses how we continue to see an acceleration in capital market reforms in China; from the loosening of short-selling restrictions, the lowering of foreign investment restrictions and the implementation of a registration-based IPO mechanism.


Asia Pacific


China has been opening up selected areas of its economy to foreign investors 

Invesco Asia’s chairman, Neil Rogan, recaps an excellent 2020 for Asian markets. He also explains how a political risk discount is one of the reasons why Asian markets have typically traded at lower valuations than, say, America.

Ayaz Ebrahim, Robert Lloyd, and Richard Titherington, managers of JPMorgan Asia Growth & Income, explain that although trade wrangles between the US and China remain a source of uncertainty, the Chinese government continues to open up selected areas of its economy to foreign investors.

Areas such as insurance, banking, asset management and automotive production are gradually being liberalised and becoming more accessible, with strong interest from foreign investors.




We have also included comments on the flexible investment sector from BMO Managed Portfolio Growth and BMO Managed Portfolio Income; country specialist: Europe – ex UK funds from JPMorgan Russian; private equity from Standard Life Private Equity; growth capital from Chrysalis Investments; leasing from KKV Secured Loan; and UK property from BMO Real Estate Investments, U and I Group, and Safestore.


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The legal bit


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