The latest wave of the pandemic is delaying a return to (a form of) normal, adding to constraints on production, a slower resumption in services, a squeeze on margins and rising prices. Still, the shift towards less accommodative monetary policy seems inevitable.
Earnings have continued to recover unabatedly, contributing to the surge in equities, even if valuations on some indices are high and near-term earnings forecasts may be over-optimistic. One supporting assumption in the markets appears to be that the rise in long-term bond yields will remain orderly.
Watch our monthly asset allocation video entitled The Delta dilemma with chief market strategist Daniel Morris for more details on our views and positioning in the various asset classes
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.