Investment Insights Q3 2021

Investor optimism spread over the second quarter as economies around the world continued to reopen and many aspects of our lives returned to normal. Successful vaccination programmes and stimulus measures across the developed world improved the global outlook.

7 July 2021

During the period, government bond markets stabilised as investors gained confidence that policymakers won’t have to renege on pledges to keep the monetary stimulus flowing. And corporate bond spreads (the extra yield offered over government bonds for taking on the additional risk of default) fell, signalling investor confidence that recent rises in inflation will not hinder the economic recovery.

It is on the topic of inflation that we begin this issue. Though May’s inflation-induced spike in market volatility had subsided by June, uncertainty remains: will it be a fleeting inflation spike or are there more profound underlying causes that could make it a lasting trend?

We take an in-depth look at the shift towards value stocks on page 5, expanding on our observation last summer that it made sense to shift towards good-quality, cyclical companies. These types of businesses are well managed with sound financials and stand to benefit from the upturn in the economic cycle.

China remains by far the dominant demand driver for industrial metals, but is it losing its appetite? On page 6 we examine the resurgent growth in the post-COVID world and why talk of the next ‘supercycle’ for industrial commodities may be overblown.

Our next article looks at the pound and its recent rise following a sluggish few years. Brexit and the pandemic sent sterling’s exchange rate down against the currencies of our major trading partners. But as businesses reopen following a successful vaccination programme, this has attracted foreign investors, helping to buoy the pound.

You can read about this year’s resurgence of European stocks on page 8, as investors rush to price in their catch-up potential. And in our final article we examine how, without good governance, the best intentions on social and environmental policies are doomed to failure. In other words, G is the glue in ESG.

I hope you and your family remain healthy and safe. We hope to be able to open offices more in the coming months, which should allow more opportunity to meet up. In the meantime, we will continue monitoring how the investment environment is evolving as the world reopens and we start to see what the ‘new normal’ looks like. Please visit to find out more about our latest views.



We hope you enjoy this edition of InvestmentInsights

Julian Chillingworth
Chief Investment Officer

Read the latest version of Investment Insights, Q3 2021