Welcome to our latest Investment Outlook.
This quarter, many of us are wondering whether Chinese asset prices accurately reflect the negative sentiment around the country – prices that increasingly appear to offer an attractive entry point for investors.
The answer largely depends on one's time horizon – over the long term, we remain optimistic about the country’s prospects. Our economics research team elaborates in this article.
China has been the main topic of discussion at several of the client meetings I have attended in recent months and it continues to occupy the minds of many asset owners.
Clearly, geopolitics is concerning and I have debated this matter in the clear belief that we, as investors, should stay out of international politics. But over the short to medium term, this will translate into more market volatility.
We also look at emerging market debt (EMD) and examine the relationship between emerging markets and global inflation.
EMD, as an asset class, could be among the first beneficiaries of the declining-inflation trend that has begun to materialise in key regions of the global economy.
That said, from recent conversations with clients, most investors remain neutral on EMD. Some are tempted to invest in investment-grade corporate bonds, due to the higher yields, whereas others seem more interested in private credit for the illiquidity premium that’s on offer.
There’s an analysis of the world’s largest asset class — real estate — and its weakening connection with economic growth.
Given the subdued outlook for global growth, we assess the relationship between real estate investment returns and other long-term drivers.
As always, the picture is intricate – emphasising the importance of a robust due-diligence process. This includes the integration of climate-impact analysis, an area in which we have devoted considerable resources in recent years.
Finally, in a departure from our usual medium-term focus, we examine how new technology may change the way we invest in mutual funds.
Our article on tokenisation offers an insight into how work on digital assets development could eventually deliver the benefits of investing to more people, as well as inject liquidity into hitherto illiquid assets.
I hope you enjoy these articles.