Thomas Becket, Psigma Investment Management
The FTSE
Our view is that the summer volatility will continue through to the second half of 2013, but an improving global economy will help the FTSE to 6,800 and cap off a fine start to the year. Investors generally seem to be warming towards equities and we believe this tailwind should drive positive returns.
Japan
I think at this juncture one has to employ an educated guess with Japan, rather than genuine foresight, as the market is fluctuating wildly and moving around on liquidity promises rather than fundamentals. However, we have long argued that Japanese companies are cheap and believe the market could hit 16,000 by year end.
Europe/eurozone
Europe is healing, as evidenced by the latest purchasing managers’ index statistics. Equity markets in Europe have already hinted that things were about to get better and we are optimistic for the rest of 2013 and 2014. Our view is that the eurozone will grow 2 per cent in 2014 and that markets underestimate this.
S&P 500/US
We get worried on hugely consensual trades, such as the US. Headlines such as ‘The US is the new emerging market’ also cause us great nerves. US equities still merit a place in portfolios, but we would reduce [there] and fund better value opportunities in Europe, emerging markets and Japan. Solid economic fundamentals are already reflected in market valuations.
Property
We would continue to urge retail investors to avoid UK commercial property. Yields on unit trusts are not attractive and the charges are onerous. There are some parts of the UK market that will see growth, but they are specialist and hard to invest in. Better opportunities remain elsewhere in global financial markets.
Bond yields
Just as we are hitting the top end of the recent range for global government bond yields, this is the big question for the remainder of 2013. We are less bearish than some and less bullish than others. Indeed, we think the balanced argument will see bond yields continue to be range bound in the coming months. But, importantly, we stand by our view that we will not get back to the lows of the previous summer and bond markets have ‘rolled over’.
Justin Urquhart Stewart, Seven Investment Management
The FTSE
We view this index as a proxy for global growth – only 20 per cent of the sales of FTSE companies are derived from the UK. The outlook for emerging markets, which generate the majority of year-to-year global growth, is murky. In China the outlook is... goodness knows what. At least growth is likely to be positive, but it is slow and slowing. Even if a UK economic recovery comes, it will be tortuously slow. Positive but dull.
