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
American Cardinal Robert Francis Prevost has been elected Pope Leo XIV, becoming the first U.S.-born pope and signalling continuity with Pope Francis’...
Read More
A Polish man in his forties has been hospitalized in Valence after enduring a harrowing journey between two TGV carriages from Paris. ...
Read More
Cloudy with sunny intervals. Light rain is forecast for the Var region with moderate to strong winds. Highs of 17 degrees in Monaco and Saint-Tropez, ...
Read More
White smoe Is billowing from the chimney of the Sistine Chapel meaning A new pope has just been chosen! 133 cardinals have gathered in the Sistine cha...
Read More
No new pope has been elected yet, as black smoke signalled another inconclusive vote during the conclave in the morning of Thursday the 8th of May. ...
Read More
