You are here: cherry > Press releases for October 2014 > Pemberton’s View – wealth manager HFM Columbus’ investment director Rob Pemberton delivers investment outlook for Q4 2014 – commercial property ‘the most buoyant asset class this year…”

15 October 2014

Equities looking increasingly volatile

Commercial property ‘most buoyant asset class, delivering steady capital returns

Key pointers:

 

   The global economy continues its muted recovery, though with an increasing variance in growth between the major economic blocs.

   Central Bank monetary policy will diverge with the US and UK in the foothills of a limited and gradual tightening whilst the European Central Bank and the Bank of Japan remain committed to a very loose policy stance.

   This combination of improving growth and loose monetary policy continues to be supportive for global financial markets, which have paid little attention to the well-publicised geopolitical headwinds of the last few months.

   Equities have risen towards all-time highs, long dated Sovereign Bond yields have fallen and credit spreads tightened.

   However, valuations now reflect a lot of this good news and equities need to see sustainable earnings growth to move appreciably higher. We would also expect an increase in equity market volatility over the next year with the potential for some painful falls along the way.

   To the surprise of many long dated Government Bond yields have fallen in 2014 leading to healthy capital returns. Bonds offer little value and we continue to believe that yields will eventually tick back up, albeit only gradually.

   Central Bank monetary policy remains the main driver of both equity and Fixed Income markets.

   The biggest risk to markets is a more 'hawkish' tightening policy from the US Federal Reserve Bank. Markets could see heavy falls should we see a hurried and unscripted rise in rates.

   The US dollar looks set to be the strongest major currency over the next year. Political concerns continue to hang over sterling, though we expect it to strengthen against the euro and the Japanese yen.

   Commercial Property continues to be the most buoyant asset class this year producing strong capital growth alongside a steady income stream.

 “We expect an increase in equity market volatility over the next year with the potential for some painful falls along the way,” said HFM Columbus investment director Rob Pemberton.

“Commercial Property continues to be the most buoyant asset class this year producing strong capital growth alongside a steady income stream.”

 

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