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In Focus January 2019

In Focus Monthly - January 2019

Equity and wider capital markets rioted to the last in 2018, despite December usually being time for investors to relax. What spooked global investors in December? What does it mean for our portfolio positioning for the year ahead?

In volatile times the Japanese yen often strengthens and, in mid-December, we saw a material re-pricing of USD/JPY begin. Is there an opportunity here?

Chinese equities experienced a torrid period last year. Shanghai and Shenzhen stock markets dropped about 25% and 35% respectively. Despite this, our experts believe there are good reasons for a medium-term allocation to the Chinese stock market in a globally diversified portfolio.

A sharp decline in long-term government bond yields dropped in line with the deterioration in market sentiment for Q4’s fixed income markets. Read why we believe that current rate expectations are too pessimistic.

For now, the crude oil price curve is in contango, suggesting a negative roll yield. Find our when we believe oil will become more attractive.

We hope you enjoy reading this issue.

What happened to 2018’s Santa rally?

The Christmas spirit was notably absent this year, as equity and wider capital markets rioted to the last.

Tightening supply conditions ahead

Despite an encouraging start, 2018 turned was a difficult year for commodities, with all commodity sectors yielding negative returns. Read our predictions on when oil will become more attractive.

The US dollar and yen under the microscope

Read we why believe investor sentiment is currently excessively negative on USD/JPY, and therefore in favour of buying USD/JPY.

Taking stock of the Chinese stock market

Read why we still hold an overweight exposure to emerging market equities, including China.

A tactically underweight duration

We believe that just as in 2016, current rate expectations for long-term government bond yields have become too pessimistic. Our experts explain why.

Catch up on our older issues of In Focus Monthly: