Good analysis from the Financial Times looking at recent the Chinese share market gyrations, what effect they will have on the Chinese economy and the wider emerging market economies.
Tag Archives | Equities
Based on the maxim that “when a consensus grows strong enough, there are great profits to be made from betting against it”, John Authers made a case in the FT recently for investing in European stocks, albeit “for those with patience”.
The current consensus, established once markets began to rally after the 2008 financial crisis, is that “the US will be fine, while Europe will not”.
Whilst agreeing that this is in fact based on reality and also that established market trends can continue long after the reality that established them has altered, Authers suggests that the current price of US and EU stocks compared to their respective average earnings can only be justified if the US boom continues while Europe falls further into recession.
This he says is “hard to swallow” with European corporates now “positioned for a revival”. Also the US economy could grow too fast, sparking inflation and causing higher interest rates that would hit share prices.
The conclusion is that the US cannot continue to stand alone and the consensus on growth stateside will actually pull the eurozone with it. Hence “European stocks will outperform US stocks over the medium term”.
Bernard Doyle, head of JBWere Investment Strategy, presents a high level investment strategy update for investors. For now, they see a US led recovery continuing and remain overweight equities. However they believe that we are now in a low return world, in the late stages of the equity market recovery, and they expect, by the end of this year, to have a more neutral allocation to equities. It also covers global earnings and valuations, stabilisation of world growth, China and Europe and tactical asset allocation. Well worth a watch, click on the image below.
Our Premium Service
Best of class wealth management service built on a solid professional relationship with your adviser to produce bespoke investment advice backed by top quality investment research. The service includes all brokerage costs, custodial services, comprehensive reporting, online access to your portfolio, preferential access to new issues, all based on a very competitive and transparent fee structure.