Investor 91 Asia

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THE INVESTOR CENTRE
All information correct as at 30 September 2016
T he UK economy appears to have
seen little impact from the Brexit
vote.The fall in sterling has helped
exporters, and the Bank of England’s
halving of interest rates has helped
maintain consumer con dence.Also,
the speedy transition in the leadership
of the country has reduced uncertainty.
Equity markets continued to rally as
investors reacted to the reduction
available in yields in government
bonds.The UK’s domestically
orientated companies generally saw
recoveries from the sell-o s seen after
the Brexit vote.
New purchases were made in Bovis
Homes and SIGGroup.The holdings
of Lloyds Banking Group and
Pendragon were increased and
holdings of Blue Capital Global
Reinsurance and Blackstone/GSO
Loan Financing were sold.
Governments worldwide are
realising that supportive monetary
policy is reaching its limit.
Infrastructure spend is likely to
increase with both candidates in the
US presidential election advocating
this. If this becomes more widespread
it will have signi cant implications for
leadership in equity markets.
Following a quiet summer, volatility
returned in September.However,
investor sentiment remained high in an
environment characterised by risk-on
behaviour and lower-for-longer
interest rates.
We witnessed a back-up in bond
yields as markets reacted to uncertainty
about future central bank stimulus.
German bunds returned to positive
yield territory, alongside a climb in
yields in the US and Japan.This
impacted stock markets,which had
their biggest daily fall since the UK
referendum.Central bank policy still
dominates market movements and
markets are viewing Bank of Japan,
ECB, Federal Reserve and Bank of
England meetings with interest.
Oil prices rebounded after lows but
struggled to sustain momentum.The
bounce in commodity prices, a stable
US dollar and solid Chinese growth
have supported emerging market
assets in 2016.The region’s equity
markets have also bene ted from
attractive valuations, and the search for
yield continues to be a global theme.
In ation-linked debt and global
timber and forestry were standout
performers.
George Luckraft Martin Horne BlackRock Market Advantage Team
T he early part of Q3 saw high-
yield markets continuing to rally
as accommodative central bank
policies, and an improved commodity
price backdrop, helped to alleviate
market concerns.
On the economic front, the rhetoric
from the Federal Reserve inAugust
reiterated the case for gradual rate
hikes with the probability of a 2016
increase looking more likely.While
this likelihood of a 2016 rate increase
in the US is on the table, the European
Central Bank is expected to continue
its e orts with regards to quantitative
easing,which could provide support
to the senior secured bond asset class
within Europe.
While both the European and US
markets have generated signi cant
positive returns thus far in Q3,we are
starting to see some have
seen a decent volume of new bonds
coming into the market,with this new
issuance continuing to be dominated
by re- expect further
opportunities to invest in robust
credits, combining the attractive yield
characteristics with the senior secured
positioning in the capital structure
which the asset class has to o er.
BABSON CAPITAL
International Corporate Bond
New opportunities will be available
to invest in robust credits
BLACKROCK
Alternative Assets
Inflation-linked debt and global
timber and forestry performed well
AXA INVESTMENT
MANAGERS
Diversified Income
Allshare Income
Holdings in Bovis Homes and SIG
Group were added to portfolio
High-yieldmarkets
rallied as a result of
central bank policies
Volatility returned to
themarket, following
a quiet summer
Interest rate cut has
helpedmaintain
consumer con dence
30 | THE INVESTOR