Page 7 - DIY Magazine March 2018

ASIA
Asia continues to be (at the same time) a catalyst for, engine of and beneficiary of the global economic rebound
Scottish Oriental Smaller Companies Trust managed by First State Investments noted that the global economic recovery, at which Asia is at the heart,
has broadened into more structural growth and can therefore be said to be relatively strong. As bottom
up stock pickers, they fight shy of agreeing if this has peaked or not. The economy and weaker US dollar has allowed central banks to keep interest rates low.
EUROPE
Investors remain optimistic on the outlook for Europe, whilst pointing out the headwinds that the continent might face in 2018 from the end of QE and changes to the global trade environment.
All European managers that reported results in February shared the same opinion about the end of support
from central banks. Jupiter European Opportunities commented that the ECB has indicated that it will reduce its ‘quantitative easing’ to more normal levels. They also agree that valuations of European smaller companies are not stretched, following a period of positive equity markets. Ollie Beckett and Rory Stokes of European Smaller Companies reported that they remain a relatively scarce source of value in an expensive world.
TR European Growth’s Jack Perry CBE of European Assets Trust said that global asset prices have obviously recovered strongly since the economic crisis and that action by central banks may have an impact on European smaller companies.
EMERGING MARKETS
As with Asia, Emerging Markets are beneficiary of the global economic rebound. They are, however, susceptible to possible trading restrictions imposed by the US
Austin Forey of JPMorgan Emerging Markets says despite the strong performance of emerging markets since 2016, valuations are normal as markets have come from a low base and benefited from shifts in
the global economy and developments in technology; Mark Hadsley-Chaplin, of Aberdeen Emerging Markets and Aberdeen Standard agree that the
global economy has encouraged but reference tensions between the US and China, particularly as Trump has proposed steel and aluminium import tariffs; a move that has been criticised by Beijing.
The investment advisers to the Gulf Investment Fund make a case for investing in the Gulf Cooperation Council (GCC) area as a diversification away from the larger emerging markets such as China
COMMODITIES AND NATURAL RESOURCES
The outlook for commodity markets remains moderately positive as synchronised global economic growth continues.
Ian Cockerill of BlackRock World Mining believes that 2018 will be another year of synchronised global economic growth where commodities generally perform well; it is still trading at a material valuation discount to broader equity markets, but there are economic and geo-political risks.
Riverstone Energy reported that oil prices spent most of last year oscillating in a range of $40 to $55 per barrel to push through $60 per barrel in the second half of last year as the market rebalanced.
7 DIY Investor Magazine | Mar 2018