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.
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Executive view of the quarter
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.
Global Equities have recovered strongly this year (in the case of US Equities, to new highs) and our expectation of rapprochement in the near term between Trump & Xi suggests that we are likely to see them move further upwards in the coming months.
Insights from the GISG
Key investor insights from the Q3 report
In the Q3 report, the GISG offers comprehensive insight into global investment trends and potential icebergs. Here are some of the key take outs:
About the author
Patrick writes and edits content for Investec Wealth & Investment, and Corporate and Institutional Banking, including editing the Daily View, Monthly View, and One Magazine - an online publication for Investec's Wealth clients. Patrick was a financial journalist for many years for publications such as Financial Mail, Finweek, and Business Report. He holds a BA and a PDM (Bus.Admin.) both from Wits University.
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