Investment Insights Q2 2017
Early last year, investors were preoccupied with fears about the pace of China's economic slowdown and the threat of deflation. Just 12 months later, and almost 10 years since the start of the financial crisis, a global economic upturn appears to be under way across the US, Europe, Asia and most large developing countries.
Inflation is rising, helped by a rebound in commodity prices. These upward pressures have been exaggerated in the UK by the weak pound, which fell sharply following the EU referendum vote last June. From an investment perspective,
businesses with a competitive advantage and pricing power are likely to come out on top, as we explain in our lead story on page 3.
In today's persistently low interest rate environment, finding inflation beating returns is an ongoing challenge. It might be tempting to invest directly in commodities, particularly if you've heard a convincing case for a particular raw material. However, this is not a market for the faint-hearted (see page 5).
Disruptive technology is another popular investment theme. Technological developments are fast changing how we live, with profound investment implications. In the next few years, some companies will go out of business as they become obsolete, while others will survive by adapting. On page 6 we look at how to identify those companies that might benefit from new technologies.
Meanwhile, many investors know that the country in which an equity index is domiciled often bears little resemblance to the geographic spread of its underlying revenues. We have researched how the revenues underlying the six major regional equity indices are actually comprised, and the results are nonetheless surprising. Find out more on page 8.
Lastly, with concerns mounting about politics ahead of key elections in France and Germany, should investors be concerned about the potential impact on financial markets? In our final article on page 9, we explain the reality behind the headlines.