Q3 Investment Outlook

SUMMARY

• Global equities have recaptured most of their losses from earlier this year
• The massive monetary and fiscal stimulus has fuelled hopes of a V-shaped rebound in the economy
• An economic upturn is underway, although, as expected, its pace has slowed following an initial spurt
• We expect the recovery to be a stuttering affair, although the outlook hinges on Covid-related developments
• Equity valuations now look on the high side and there is the risk of a correction over coming months
• Further out, equities have additional upside and return prospects are significantly better than for fixed income
• We are relatively cautious on UK and US equities but more positive on Asia and have added an exposure to healthcare
• Prospective returns from corporate bonds look limited but are significantly higher than for government bonds