Global equities posted strong performance in September with the MSCI (Global Equity index) gaining by 2.3% on USD terms buoyed by first rate cut in US in more than four years. The fall in interest rates aided the recovery in prices of tech stocks with the S&P 500 & Nasdaq composite indices gaining by 2% & 2.7% respectively during the month. Speculation that a reduction in the ‘Tax-Free element’ of UK pensions might be announced in the Budget on 30th October has caused anxiety among current and future retirees. Is this likely? Our latest portfolio focus is on S&P Global clean energy index which more than doubled in 2020 during the first wave of covid pandemic, but is currently down 60% from its peak in Jan 2021 (vs. 53% gain for S&P 500 over the same time frame). In addition, we provide our market views and outlook as we expect the fundamentally sound quality names having features such as high Return on equity, low leverage, healthy margins and good dividend prospects to post better performance over the forthcoming year where economic growth is expected to witness a slowdown. We hope that you enjoy reading this latest newsletter and, as always, we would like to hear from you too, so please email us at info@realmim.com with any questions or requests for future topics. Eugene Lawlor |
Market views and outlook The US Fed slashed the policy rates by 50bp to the 4.75-5.00% range, in a move which is seen as the beginning of the rate cut cycle and thereby providing confidence about soft landing of the economy. In terms of country-wise performance, the highlight of September was the surge in Shanghai Composite and Hangseng indices (both the indices up by 17% each) driven by stimulus from Chinese government to boost the economy and capital markets. We continue to remain positive on US and European smaller companies and global government bonds, both of which are likely to benefit from a benign interest rate environment. While a Labour government may offer political stability, concerns on a slowdown in the underlying UK economy combined with overruns on the fiscal side may lead to weakness in sterling which should have a positive impact on client portfolios. Read our latest market commentary in full. |
Has the Clean energy theme run out of Steam! S&P Global clean energy index more than doubled in 2020 during the first wave of covid pandemic, but is currently down 60% from its peak in Jan 2021 (vs. 53% gain for S&P 500 over the same time frame). Year to date in 2024 the clean energy index is down 7%. The underperformance of clean energy stocks is attributable to various factors like surge in interest rates, high inflation and demand-supply mismatch. Transition to green energy is essential considering the challenges posed by climate change. However, from an investment perspective while lower interest rates and declining inflation are a positive, it may not result in relative outperformance versus other sectors due to the high capital intensity of this industry. find out more about our view on Green Stocks |
Could your pension be adversely affected by Rachel Reeves? Speculation about reduction in the ‘Tax-Free element’ that currently allows a plan holder to withdraw up to 25% of their pension as a tax-free lump sum and immediate implementation of the same from midnight of 30th October, the day of UK budget have caused anxiety among current and future retirees. However, it is to be noted that these changes even if announced in the budget can’t get implemented immediately since any changes to the rules governing pensions would require approval through Parliament in both the House of Commons and the House of Lords. Also considering the fall in consumer and business confidence due to these speculations. the new government could announce alternative measures like applying the standard basic rate relief at 20% for individuals which would be easier to implement and affect far less people. For More information here. |
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This communication is not intended as a recommendation to invest in any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication. The information provided is for illustrative purposes only, it should not be relied upon as recommendations to buy or sell investments.’