Investment Views

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June 2020

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

Investment Views for Jun 2020

  • Positive
  • Neutral
  • Negative
Asset Class Current View Outlook

Equities continue rally from their lows set on 23rd March as central banks and governments continue to provide unprecedented levels of monetary and fiscal stimulus to markets and economies. The scale of support from central banks has been staggering with the Federal Reserve cutting interest rates to 0-0.25% and engaging in unlimited quantitative easing. Governments have also provided fiscal stimulus, with the UK government paying wages for the first time in history, while the US has announced four rounds of stimulus packages equating to some 15% of GDP. These policies have provided a bridge to economies during the lockdown period. The world is now into the next phase, re-opening economies as the immediate threat of the virus has fallen in most countries although some emerging countries are still seeing a rapid increase in numbers, while in the US several states are continuing to see a sharp pick up in infection rates. After the shocking jobs numbers in March and April, unemployment levels are starting to fall as people return to work. Forward looking economic data has also started to improve although economic activity is still some way below the levels prior to the outbreak of COVID-19. The outlook for corporate earnings remains challenged in the short term and highly uncertain in the medium term, which leads us to take a cautious approach to equity markets.

Fixed Interest

Government bond yields remain close to their all-time lows, as central banks’ quantitative easing programmes hold down yields, even as risk assets have rallied. These asset purchase programmes have been extraordinary their size, speed and breadth. The Federal Reserve’s quantitative easing programme (QE4) has exceeded $2 trillion since March and is already larger than QE1 which it initiated in the aftermath of the financial crisis and lasted over a year. It also includes investment grade bonds and, for the first time, those bonds which have been downgraded to high yield, providing significant support to credit markets. Emerging market bonds continue to benefit from higher yields than their developed market peers, both in nominal and real terms.


The outlook for property has changed significantly as a result of COVID-19. Demand for office property has fallen due to the recessionary environment and is likely to be structurally lower going forward. Many businesses have discovered that their employees can be at least as productive working from home and will not require the same amount of office space in the future. Retail property which was already under pressure from internet shopping has been dealt a further blow from the lockdown and changes in consumer behaviour. There are brighter spots, such as technology-related real estate, but as a broad asset class the outlook is challenging.


Industrial commodities – after a slump in demand during lockdown, prices are firming as China’s stimulus packages take effect. Over the longer term, however, the outlook remains uncertain.

Oil – prices continue to move higher after the historic falls in March as demand starts to recover. After the disastrous spat between Russia and Saudi, OPEC continues to reduce supply to support the oil price.

Gold – gold has a strong record as a store of wealth when interest rates are lower than inflation. Central banks have been clear that this will be the case for the foreseeable future.

Absolute return – in a world of low government bond yields, absolute return strategies provide diversification benefits.


As a long-term investment, cash is likely to lose money after inflation. However, cash is an important tactical tool in an uncertain environment.

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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