Chris Holdsworth, Chief investment strategist from Investec Wealth & Investment, gives an overview of their insights into the factors informing their risk positioning for the quarter, the medium-term global outlook, how it will impact the South African economy, and what icebergs may lie ahead.

The Global Investment Strategy Group reduced the recommended risk budget to a modestly “risk-off” position from Neutral - a stance that had been held since December 2018.

Our central case expectation remains that the current risk-asset friendly combination of global economic and corporate profits-growth together with low inflation will extend beyond the forecast horizon.  However, we perceive that the environment will become more challenging as we move into 2020 – which will add a contentious American presidential election to the mix of already inflamed global superpower politics. With risk asset valuations fair in the context of both low-interest rates and continued growth in profits, there is a limited cushion against negative surprises, whilst the possibility of them has risen.

Although we expect risk assets to rise in the near term as immediate icebergs are negotiated (Trump/Xi @ G-20), we believe it prudent to take a more cautious view of prospects over our 18-month forecast horizon.

"We have not made any major asset allocation changes this quarter. Our positioning is best thought of as “waiting in the wings,” says Paul McKeaveney, Chairman of the Asset Allocation Committee, Investec Wealth & Investment SA.