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Quarterly Perspectives

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LATEST QUARTERLY PERSPECTIVES

21 Eurozone GDP

Theme overview

Europe’s slowdown – already in the price?
  • The eurozone economy has been slowing, but if the economic data stops disappointing there is scope for eurozone equities to bounce.
  • Italian politics remains a source of potential volatility, but Italy is unlikely to leave the euro.
  • A mix of both upside and downside economic and political risks argues for an allocation close to neutral for European equities at this time.
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Theme overview

Can emerging markets cope with higher US rates?
  • Five years after the taper tantrum, the external vulnerabilities of emerging markets are back in focus. Investors are concerned that rising US yields and a strengthening US dollar could undermine emerging market (EM) financial stability.
  • EM countries with high current account deficits and high external debts relative to the size of their economies are particularly vulnerable. Currently only three countries screen poorly on these metrics. We do not view this as a broad EM concern.
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44 Emerging markets focus: Diffentiating external vulnerabilities


89 Sustainable investing

Theme overview

Sustainable investing: What is it and how does it affect investment decisions
  • While sustainable investing is a broad term that can mean different things to different people, it is becoming an increasingly important consideration across investor groups and asset classes.
  • Environmental, social and governance (ESG) topics can be part of broader investment goals, or a specific requirement. Investment strategies that consider ESG can be aligned with client objectives in different ways.
  • As page 89 of Guide to the Markets – UK shows, considering ESG factors as part of an investment strategy need not cost investors returns, and may even improve risk-adjusted returns in some cases.
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