Investment Directors’ Bulletin, October 2015

Edmund Brandt and Ed Walker write in their capacity as investment directors. Their asset allocation views are based on a 12-month time horizon and reflect the input from various investment teams within JP Morgan Asset Management. The discussions are considered with Edmund and Ed ultimately producing their views on the regions in terms of underweight, neutral or overweight.

World stockmarkets remain under pressure in September

September saw global equities remain under pressure. The MSCI World Index fell -3.6 per cent in local currency terms, as investors worried about three key uncertainties to global growth prospects: a) the potential for a hard economic landing in China, b) the likely path of US interest rate increases and c) the perception that risks of a world recession are rising. Most major markets fell materially during the month. The worst performers in local currency terms were Japan (-7.9 per cent), Spain (-7.2 per cent) and Germany (-5.8 per cent). Meanwhile US equities corrected by -2.7 per cent. Looking at emerging markets, the MSCI Emerging Markets index was down 'only' -1.7 per cent in September. But on a year-to-date basis, emerging markets continue to lag developed nations. The past three months have been a very difficult period for global equities. Developed markets fell by over -7.0 per cent in local currency terms and emerging markets by over -12 per cent. As a consequence, in local currency terms, both the MSCI World Index and MSCI EM Index are under water on a year to date basis, down by -3.9 per cent and -7.1 per cent respectively.

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