Our outlook for 2020 reflects the complexities of the current global investment landscape. For investors, we feel that the only way out of this challenging landscape is to move through it, relying on key pockets of resiliency and opportunity. In the absence of a uniformly rising tide, choosing where to invest matters more than ever.
In our view, there are four key drivers for investors to consider that can guide their outlook for 2020:
Trade tensions and tariffs
The ongoing China-US trade war and political posturing in the months before the US election will likely cause periods of volatility.
Fiscal support only looks possible in Europe and Japan, and certainly not in the US, where the upcoming election is likely to drive policy. Any easing is likely to have a disproportionate impact on markets.
Adverse supply side shocks could lead to slower growth combined with rising inflation.
Managing exposure to currency risk will be key when looking for opportunity and diversification across borders.
Continued central bank support should support equities in the year ahead. For investors looking to stay invested in equities, but who might be waiting for a catalyst before concentrating in a specific region or sector, a broad equity benchmark may be suitable. We do see value in emerging market equities relative to developed markets, and any abatement in US-China trade tensions could provide one such catalyst to drive investors into that region.