Investment Views

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March 2020

Here we summarise our Investment Committee's immediate outlook for the primary asset classes and major equity markets.

Investment Views for Mar 2020

  • Positive
  • Neutral
  • Negative
Asset Class Current View Outlook

Backward-looking data offers little insight into current developments within the global economy. The scale of the damage caused by Covid-19 is unknown and will only be realised as economic statistics and corporate earnings are released. The sharp falls in the markets have continued as the highly contagious nature of the coronavirus has become apparent. This has required governments, central banks and societies to adopt extreme measures to help contain and manage a major global public health crisis. Large parts of the global economy have come to an abrupt halt or at least a significant slowdown, and thoughts are focused on the timescale of containment measures and the extent of the damage inflicted on world growth. The extreme reaction in the markets reflects elevated investor uncertainty, and despite global governments beginning to release huge stimulus packages there is unlikely to be a sustained recovery until the rate of increase in new viral infections has clearly peaked – until then stock markets are likely to remain under pressure.

Fixed Interest

The massive flight to safety has seen investors dump equities in favour of government bonds causing yields to fall. The action of central banks in cutting interest rates gave support, but as investors have sought liquidity prices have softened a little; longer-term concerns over the likely necessity for yields to rise to compensate for the expected scale of bond issuance, as governments take steps to offset the economic impact of this crisis, are also influential. Investment grade bond markets have become dysfunctional seeing a general retreat in prices as the market considers which companies will survive this crisis intact. The stepping up of QE by central banks has provided some support but nationalisation seems a distinct possibility for some companies. With over half of the investment grade bond market rated as ‘BBB’ we expect downgrades in due course which will further unsettle prices. Furthermore, we anticipate a rise in the number of defaults in the high yield bond sector and prices now reflect this.


The extent of the damage to the immediate economic outlook by the coronavirus will become apparent as the days and weeks pass. The retail sector was already under pressure, but this has been made worse by shoppers staying home and the pressure to close all but the most essential stores. Although warehouses and office space are less affected the longer-term implications for the sector are unknown until a full assessment can be made of the impact on the economy and any long-term changes that might ensue. In the short term, general market uncertainty creates the challenge of valuing properties, whilst the sector comes under pressure from investors who are seeking to de-risk their portfolios, conscious of the liquidity issues that arose immediately after the Brexit referendum in 2016.


Industrial commodities – with the spread of the virus in China showing signs of slowing and the economy being the largest consumer of industrial metals, metal prices have held up better than global equities. Even if China’s economy starts to function again quite soon any price rise may be capped by the time it takes for other economies to resume normal activities.

Oil – with prices already reduced reflecting falling global demand, the failure of Saudi Arabia and Russia to agree supply levels has caused prices to tumble to below $30 – an uneconomic level for producers. Little prospect of any substantial price rise from here until the global economy turns the corner.

Gold – although gold has displayed its usual safe-haven characteristics when investors dump equities, the ‘dash for cash’ of late has seen a softening in price as the US dollar has strengthened. However, the longer-term benefit of holding some gold as a hedge remains.

Absolute return – offers the potential to dampen volatility and provide some downside protection, but returns are often moderate at best.


With UK interest rates at such low levels for the foreseeable future, yield-hungry depositors will remain disappointed. However, in such volatile markets ‘cash is king’ for many investors who will be content to earn very little for the knowledge that they are holding liquid assets.

Equity Region Current View Outlook

See above comments in section denoted ‘Equities’


See above comments in section denoted ‘Equities’


See above comments in section denoted ‘Equities’


See above comments in section denoted ‘Equities’

Asia Pacific and Emerging Markets

See above comments in section denoted ‘Equities’

Risk warning: Investors should be aware that past performance of investments is not a reliable indicator of future results and that the price of shares and other investments, and the income derived from them may fall as well as rise. The content of this bulletin is for general information and reflects the general market view of Parallel Investment Management Ltd. - it should not be interpreted as recommendations or advice. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of the content.

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