Welcome to the October edition of “Market Perspectives”, the monthly investment strategy update from Barclays Private Bank, which is also available to download as a PDF [PDF, 325KB].
Persistent trade tensions and rising geopolitical risks are taking their toll on the global economy. Indeed, Germany appears close to recession. But this is due to its high exposure to manufacturing, which has been the main victim of the ongoing trade dispute. Services and households continue to be resilient and should prevent a global recession. At a time of such elevated uncertainty, we prefer companies exposed to areas immune to trade tensions.
Sentiment towards equities improved in September on hopes of a US-China trade accord. However, limited upside to earnings and rich market valuations mean that equities are unlikely to break significantly above their trading range. That said, several opportunities exist for active managers to add alpha.
In particular, we keep our preference for quality stocks. While value stocks rebounded strongly against their quality peers in September after years of underperformance, quality stocks remain a more compelling investment style and are likely to regain the ascendency soon.
Despite concerns over high leverage levels and an economic slowdown, the outlook for investment grade debt is positive. However, security selection will be key for speculative grade debt this late in the cycle, as the risk of a surge in default risk rises.
Private debt assets under management have more than trebled in the ten years to 2018, buoyed by low interest rates and an expanding pool of negative-yielding fixed income securities. Prospects for the asset class remain positive, not least thanks to different strategies which benefit at different times of the economic cycle.
Jean-Damien Marie and Andre Portelli
Co-heads of Private Bank Investments
The largest wildfire in at least 50 years in France, which claimed one life, has now been brought under control. The fire swept through 17,000 hectare...
Read More
A yellow heatwave warning remains in place today. Hazy sunshine with a gentle coastal breeze. Daytime are forecast to reach between 30 and 32°C in the...
Read More
A major pile-up involving around ten vehicles, including a truck and a motorcycle, occurred early on the 7th of August in the Las Planas tunnel on the...
Read More
Banque Havilland (Monaco) SAM will relaunch as Moncrief Private Bank (Monaco) SAM in late 2025, following its acquisition by an international investor...
Read More
Monaco has introduced a new road safety law that bans children under 14 from using electric scooters or electric bikes on public roads. The change is ...
Read More
