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Article | Global Markets Overview

Global Markets Overview: May 2020

Investments
COVID 19 Coronavirus

By David Hoile | June 2, 2020

Tracking recent asset price moves and our outlook

Our Global Outlook

  • First, allowing for uncertainty, our outlook is as follows: China GDP growth will start to recover in Q2; the US and Europe will experience a major recession in Q1 and Q2, but we expect GDP growth will start to pick-up in Q3 or Q4. Small and midsize companies in advanced economies will likely be more negatively impacted. Less developed economies will suffer more than advanced economies in the nearer term. Not all sectors are affected equally in this scenario, e.g., service sectors, including aviation, travel, and tourism, are likely to be hardest hit – it could take several years for economies to fully normalise.
  • Second, from a five-year investment standpoint, given the acute changes in bond, credit, and equity pricing, we forecast that we have moved to a higher return and higher risk regime, from a low return/low-to-medium risk regime.
  • Third, recent market moves have been severe but, in our view, provide a reminder about the regular actions investors can undertake. We will always face systemic risks, whether they are economic, societal (such as COVID-19) or environmental. Thinking carefully about the following actions we believe will provide more resilient and, ultimately, more successful portfolios over time:
    1. The level of risk one can tolerate;
    2. Maximising the amount of diversity;
    3. Removing unrewarded risks;
    4. Carefully thinking through and managing liquidity needs.
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Senior Director, Investments

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