Global Investment View Q4 2018

Your look into the most important investor insights for the quarter

Introduction to the latest quarter

The Global Investment View for Quarter 4 2018 distils the outcomes from the most recent meeting of Investec Wealth & Investment’s top strategic minds. Here, experts from the Investec Global Investment Strategy Group (GISG) offer 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. 

Executive view of the quarter

Investec Wealth & Investment’s Global Investment Strategy Group (GISG) has retained its modestly “risk off” stance going into the fourth quarter. This is based on the view that the world is largely still enjoying synchronised growth in all of its key economic blocks (the US, Europe and China-centric emerging markets) for the first time since the Great Financial Crisis.

However the combination of a soft spot in Europe, a strengthening US dollar and a highly aggressive US stance on trade has cast its durability into doubt.

Download the latest investment insights for Q4 2018

We believe that China can and will use domestic stimulus to offset much of the material effect of any fall-off in export demand to the US precipitated by the trade war.

Insights from the GISG

Key investor insights from the Q4 report

In the Q4 report, the GISG offers comprehensive insight into global investment trends and potential icebergs. Here are some of the key take outs: 

On economic global trends

On the SA Market

On Asset Allocation

On economic global trends

  • The global economic picture remains good, in spite of recent weakness in some emerging markets.
  • The overall outlook is one of only modestly decelerated, but still largely synchronised and resilient, global growth in 2018 and 2019 (3.7% and 3.7%, according to recent forecasts from the IMF, reduced from 3.8% & 3.9% respectively).

On the SA Market

  • The third quarter was a disappointing one from a return perspective for South African investors.
  • Local assets classes struggled to take any clear direction over the quarter with returns in the range of -1% to +2%. Global equities were the clear winner when looked at in rand terms, up just over 7%.
  • Global government bonds were also well up in rands at one point, before giving up those gains up in September.

On Asset Allocation

  • We feel like there is more of a sense of urgency within the government to address our anaemic growth rate.
  • While it may not feel like we are moving forward quickly enough, we are moving forwards in terms of addressing corruption and delivery issues at the state-owned enterprises, SARS and other government-related institutions.
  • Both local and international investors are generally underweight SA assets – if there is a change in appetite for EM or towards South Africa in particular, prices could move favourably.
Paul McKeaveney
Going into the fourth quarter of 2018, we as the South African Asset Allocation Committee are more upbeat – SA risk assets are at similar, if not better, valuation levels than they were before Cyril Ramaphosa won the ANC leadership race last December.

Paul McKeaveney, Chairman of the Asset Allocation Committee, Investec Wealth & Investment SA

Download the report to get the full picture

John Haynes
Outside of the “fragile five” (Argentina, Brazil, Indonesia, South Africa and Turkey) the world is largely still enjoying synchronised growth in all of its key economic blocks (the US, Europe and China-centric emerging markets) for the first time since the Great Financial Crisis.

Investec Wealth & Investment UK and Chairman of the Global Investment Strategy Group, John Haynes, Head of Research

How we set our risk budget

Our Global Investment Strategy Group on how they set the risk budget and their outlook for the rest of 2017.

Brian Kantor
Our view is that China is, at worst, going to reveal a very soft landing for its economy. Satisfactory growth will be sustained, as will the demand for metals and minerals, for which China has become the largest buyer by far.

Brian Kantor, Chief Economist and Strategist, Investec Wealth & Investment SA

Read the full report for Q4

Find out what the medium term SA market view is and see the full global and domestic asset allocation positioning for the quarter. 

More insights from the GISG

Read more articles and thought leadership from the investment experts of the GISG. 

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