Investing in growth and value stocks The uncertain economic and political outlook suggests growth will be harder to come by in , which may dampen investor appetite for growth stocks that rely on share price appreciation. Analysts note that some sticking points and questions surround the tentative trade agreement , and cautious optimism seems the byword for Monday as stock futures creep higher. Source: EY You can aim to buy shares in companies that are considered takeover targets in the hope a profit can be made if a bid is made in the future, either by the offer being accepted or because it propels the share price higher. Geopolitical risks to supplies remains the key issue for the oil price. How much does trading cost? Chemours, he says, «is a well-run, shareholder-friendly business, and the stock is unreasonably depressed after a sharp sell-off.
Investment trends to watch in 2020
Thanks largely to the US Federal Reserve doing an abrupt ‘U’ turn on rates, and with other central banks also adopting accommodative policy responses, most asset classes have provided investors with positive returns and some seasonal festive cheer. But will Scrooge appear sometime next year in the shape top investments of 2020 a recession to put a damper on things? Commentators are finding it challenging to peer yop the blizzard of issues that include geopolitical risks, slowing global economic growth, potential recession and any fiscal or monetary responses that may present themselves in However, inveshments storm has abated sufficiently for this collection of papers to outline some of the potential risks top investments of 2020 investors should consider, 0220 also suggesting where potential opportunities might lie, in what may prove to be another testing year. In their page investment outlook forUBS Asset Management focuses in on some of the potential risks and opportunities that lie in wait for investors in
Investment trends to watch in 2020
Expect a late-cycle relief rally as industrial production rebounds. Watch for investors to shift back towards cyclicals and yield curves to steepen. This is still not normal. To sustain a flagging US economy, it has shelved attempts to raise interest rates to its estimate of neutral and shrink a balance sheet inflated by quantitative easing. Meanwhile, European and Japanese interest rates remain negative.
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Expect a late-cycle relief rally as industrial production rebounds. Watch for investors to shift back towards cyclicals and yield curves to steepen. This is still not normal. To sustain a flagging US economy, it has shelved attempts to raise interest rates to its estimate of neutral and shrink a balance sheet inflated by quantitative easing. Meanwhile, European and Japanese interest rates remain negative. Central banks are understandably concerned about the global economic outlook.
Having held up inthe US economy capitulated in to the broad trend of slowing growth, leading to a dramatic flattening of yield curves and heightened recession fears. However, the global consumer remains resilient, offsetting weakness in the manufacturing sector. This should pave the way for a rebound in industrial production as the global inventory cycle swings back into positive territory, causing recession risks to recede.
In part, robust consumption reflects a lagged response to the increasingly synchronised looser monetary and fiscal conditions introduced to counter economic weakness, the supportive impact of which should grow steadily over It is noteworthy that developing economies have not followed the normal pattern of raising rates in response to slowing growth and interest rate cuts in the developed world, in contrast to similar episodes in the past. In general, they have been able to cut interest rates and implement pro-growth policies.
On the other side of the table, China will welcome a respite from tariff-induced economic weakness as it continues to transition to a domestically-led growth model. At the time of writing, a Trump vs. Warren contest looks the most likely pairing for top investments of 2020 main event. A win for the Democratic candidate would usher in a significant shift away from pro-business Trumpian Republicanism and towards a redistributionist, environmentally friendly, anti-big business stance.
In the key battleground of technology, US moves against China are fuelling a drive for greater technological self-reliance. That should spur the European economy, at least temporarily.
Longer term, high debt and unfavourable demographics remain big challenges for the EU. With global growth likely to revive and central banks on course to keep short-term interest rates low, yield curves look set to steepen once. This implies that economies will be allowed to run hot, potentially setting the scene for the last phase of this elongated cycle. Should this be the case, the inflation expectations embedded in fixed income valuations look too low. Government bond issuance is also rising, which could put further upward pressure on real interest rates.
The fact that the greenback failed to climb materially higher in against other currencies, even though US growth was outstripping that of the rest of the world and US rates were rising in relative terms, suggests that the US dollar bull market has run its course — at least for. That should relieve pressure on emerging market currencies. After a good year, credit should deliver reasonable, albeit lower, performance in a low-yield world.
Fundamentally, companies remain in decent shape. If the global economy holds up, as we believe it will, default rates should remain low and consequently credit quality should remain solidly underpinned. But as the need for yield accelerates, investors might feel inclined to search in the latter area once more, particularly if macroeconomic tail risks are clearly seen to be moderating. However, credit spreads are already generally tight — especially in Europe, where the ECB is using credit markets not in the pursuit of investment return but as a monetary policy tool and the cycle is mature, making the performance of these securities very dependent on continued economic stability.
Selectivity remains key in a late cycle environment Credit valuations over a 15 year period. Despite the headline noise from a few bad apples like Argentina and Turkey, under the surface most emerging markets will continue to consolidate the gains they have made in terms of macroeconomic stability over the last few years. Aggregate current-account balances will remain in surplus, while inflation across a number of major emerging markets — including Brazil, Russia and India — will consolidate at low levels never seen in history.
Growth has been disappointing, but this has been a global phenomenon. A moderate weakening in the broad US dollar will further ease financial conditions in emerging markets, which should ensure higher emerging market growth in than In turn, this could lead to unloved and underperforming local currency debt outperforming credit markets inreversing the trend of recent years. Countries to watch include Brazil, Russia, Indonesia, Egypt and Ukraine, which will go from strength to strength in implementing bold economic reform agendas.
Chastened by the last two years, weaker emerging markets such as Turkey, South Africa and Argentina should at least go from bad to better, offering tactical opportunities for investors. In equity markets, index returns in belied the widely diverging performance within the asset class, driven by a crunching rotation out of cyclical stocks and into defensive and select growth stocks.
That shift was fuelled by growth fears. But with macro uncertainty set to moderate in the year ahead, we could see some powerful reversals of the trends that have characterised equity markets since As yet, the earnings dynamics of cyclical stocks remain weak, but markets may move well ahead of any actual improvement.
Generally unloved by investors, equity markets outside the US offer risk premia that look attractive on both an absolute and relative basis. Meanwhile, Top investments of 2020 equities continue to benefit from a structural trend of improving quality and an end to deleveraging. With a longer-term perspective, we have been using stock-market weakness in and to build strategic equity exposure to Asia, especially China.
The difference in valuations between relatively cheap Asia equities and extremely expensive US equities is at a level that has historically been associated with protracted periods of outperformance for more moderately valued stocks. Asian equity markets represent a prodigious and growing opportunity set, creating a great hunting ground for active investors. But in a growth-starved world, the structural trend of the growing power of the Asian consumer is set to remain one of the dominant investment themes of our times.
The principal risk to our central case is a US, and hence global, recession. This could arise from a shock, or because manufacturing weakness has already infected the more important consumer sector in the US and other key economies.
It may also turn out that policy loosening has come too late to undo earlier tightening in both China and the US. That would likely cause another wave of uncertainty and deepen the manufacturing recession. With bonds likely to offer poor defensive properties — and perhaps even compound losses in the risk asset classes they are supposed to counterbalance — investors must seek other ways to diversify their portfolios.
Gold is a strong contender to fulfil this role. Reaching a six-year high inthe yellow metal has clearly benefited from heightened uncertainty, negative investor positioning and a reversal of the trend towards higher interest rates.
Supporting gold demand, central banks in many countries are showing a renewed interest in accumulating gold reserves instead of US Treasuries.
Gold stocks may prove to be an interesting complement to physical gold exposure in investor portfolios. After years of restructuring and balance-sheet improvement, a good number of gold producers are in robust financial health and well-placed to generate sustainable returns at prices well below current levels.
This content is for informational purposes only and should not be construed as an offer, or solicitation of an offer, to buy or sell securities. All of the views expressed about the markets, securities or companies reflect the personal views of the individual fund manager or team named. While opinions stated are honestly held, they are not guarantees and should not be relied on.
Investec Asset Management in the normal course of its activities as an international investment manager may already hold or intend to purchase or sell the stocks mentioned on behalf of its clients. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This content may contains statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events.
Actual outcomes may differ materially from those stated. All rights reserved. Issued by Investec Asset Management, issued November Select your location and role to view strategy and fund content.
Which role best describes you? Select role Select role. Investment Views Key Takeaways Macro: We expect a late-cycle relief rally in as industrial production rebounds and recession risks recede.
Fixed income: With global growth likely to revive and central banks on course to keep short-term interest rates low, yield curves should steepen.
Currencies: The US dollar may correct from the position of strength it has sustained for several years, relieving pressure on emerging market currencies. Emerging markets: Despite the headline noise, most emerging markets will continue to consolidate the macroeconomic stability gains they have made over the last few years.
Equities: As macro uncertainty moderates, trends in equity markets could reverse, with investors shifting back towards cyclical stocks. Equity portfolio strategy: Divergent valuations between expensive US stocks and relatively cheap Asian stocks are offering an opportunity to build strategic equity exposure to Asia.
Alternatives: Gold could be a valuable diversifier next year, as bonds are likely to offer poor defensive properties. Global Multi-Asset Income — prepare for binary outcomes Ineither, as equity markets hope, we will avoid sliding into a recession or, as bond markets fear, we will enter one. John Stopford warns investors to be bold and prepare for the black, the white and the grey Read. Read. EM Corporate Debt — In good company Will be different?
China Bond — A pivotal year European Equities — Key drivers for What will be the key drivers of asset class performance in ? Global Franchise — Counting on resilience rather than monetary stimulus The electric car market is one to watch in Global Equity — Divergence creates opportunities Steve Woolley explains why, if this continues, investors could miss an opportunity in and.
EM Equity -the year of differentiation for emerging markets? China Equity — Will the dragon rise in ? Greg Kuhnert shares his view on what could be in store for Therese Niklasson outlines the ESG trends to watch in
5 Best Stocks under $5 to Buy for 2020
Top investments for 2020
The emailed version will be sent out at about a. See more forex live prices. The top investments of 2020 DXY, Plan your trading. Comment icon. The picture for commodities in is mixed. Morgan Stanley says this is inveatments because the path to a no-deal has been largely eradicated. Chemours soared in price the first few years after the spin-off, then ran into operating problems that Abramowitz believes are temporary. Non-energy prices are projected to fall in before stabilizing inalthough metals prices are forecast to be lower next year. Oil outlook for Geopolitical risks to supplies remains the key issue for the oil price. Volume 2.
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