Pan-European private banking group introduces “Counterpoint,” its analysis of the world economy, financial markets and key asset classes.
London; January 20, 2020: The global economy will continue to expand this year, but investors will need to navigate significant market and geopolitical volatility, considering alternative approaches to generate sustained returns in this low-yield environment.
That is the view of Bill Street, Group Chief Investment Officer at Quintet Private Bank, which today introduced Counterpoint, its in-depth analysis of the world economy, financial markets and key asset classes.
Counterpoint focuses on five key questions for investors in 2020, presenting both the consensus view and challenging that conventional wisdom:
1. Following the longest growth cycle in history, will the US economy keep expanding?
2. Can Europe address structural issues and thrive, avoiding the threat of “Japanification”?
3. To what extent will the global trade war weigh on worldwide growth?
4. Can central banks wield monetary policy to support economic expansion?
5. How will markets react to the outcome of US presidential elections?
Reviewing the outlook for equity markets, Street said: “While many believe that 2020 will see significant corrections, we believe that equities can continue to deliver positive returns,” highlighting the potentially bright outlook for the US and emerging markets such as China, India and Eastern Europe. He sees special appeal in the historically resilient IT sector and in healthcare, which continues to benefit from structural growth drivers.
Fixed-income investors, by comparison, will face another challenging year, although corporate and emerging-market debt may offer better returns, according to Quintet’s Group Chief Investment Officer, who is positive on both European high-yield bonds and local-currency denominated emerging-market debt.
Given market volatility and geopolitical uncertainty, said Street, diversification has become a key driver of reduced portfolio risk. “With historically low correlation to the performance of both equities and bonds, alternative investments can play an important role in delivering such benefits, especially when diversifying from long-only strategies into global macro and market-neutral approaches,” he said.
Turning to oil, Street expects prices to remain under pressure as cost advantages and demand dry up. While he is positive on the Japanese yen, British pound and Norwegian krone, he noted that a high cash allocation may act as a drag on portfolio performance, and sees appeal in reallocating a proportion of cash holdings to high-quality, short-duration bonds or considering a higher allocation to gold.
Indeed, gold prices – which rose sharply in 2019 – should be supported in 2020 by continued central bank purchasing. “The growing stock of negative-yielding debt makes gold a relatively more attractive and effective diversifier than bonds,” concluded Street.
A pan-European private banking group founded in Luxembourg in 1949 and operating in 50 cities across Europe, Quintet was known as “KBL European Private Bankers” until last week, when it introduced its new corporate identity, which is inspired by music’s universal appeal and reflects the firm’s partnership approach to wealth management.
About Quintet Private Bank:
Quintet Private Bank (Europe) S.A., founded in 1949, is headquartered in Luxembourg and operates in 50 cities across Europe, staffed by 2,000 professionals. Widely recognized as a private banking leader, Quintet serves wealthy individuals and their families, as well as a broad range of institutional and professional clients, including family offices, foundations and external asset managers.
Quintet operates under the following brand names:
• Brown Shipley (UK)
• InsingerGilissen (Netherlands)
• Quintet España (Spain)
• Quintet Luxembourg (Luxembourg)
• Merck Finck (Germany)
• Puilaetco (Belgium)
• Puilaetco (Luxembourg)
For further information or to download a complete version of Counterpoint please click here.