Page 8 - Lewin, Diana - Review Report - July 2020
P. 8
The resultant carnage in asset prices saw Looking forward
equity markets approach bear market We expect a fairly mixed environment
territory almost within a week, saw some ahead with investment markets and
of the biggest daily moves in equity economics continuing to take very
markets we’ve ever seen, caused bond different paths. Whilst we’ve seen recent
markets to come to a grinding halt, and optimism and hope regarding a quicker
saw the Aussie dollar fall to US55c. In economic recovery and the promise of an
addition, we also saw a downward oil price early vaccine, at this stage that optimism
shock following disagreement between the is largely dependent on government and
Saudis and the Russians regarding central bank stimulus locally and globally
production cuts. The disagreement being extended into the period ahead
resulted in both sides increasing supply at together with a faster re-opening of
a time when demand was already waning economies. Growth assets such as
given virus containment measures. equities, property, and infrastructure
Significant policy action ensued from both continue to exhibit plenty of relative value
governments and central banks globally given the very low yields available on cash
as they attempted to build some sort of and bonds.
bridge to get their respective economies Outside of virus-related issues, we still
through to the other side of the virus. The have US-China (and recent Australia-
magnitude of the stimulus was China) tensions to work through plus the
extraordinary, with both governments and US elections in November. We don’t
central banks making it clear they will do believe we’re through enough of these
whatever it takes to prevent a prolonged issues to add considerable risk to
recession. These actions provided some portfolios, but we also don’t believe
support to asset prices in the last week of fighting against government and central
March, where we saw a rebound in equity bank stimulus by taking risk out of
prices and some healing in bond markets.
portfolios is a sensible move either. A
The quarter ended with plenty of balanced, well diversified, and patient
unknowns still to work through, including approach is required.
how long containment policies will be in
place, whether the support provided by
governments and central banks will be
enough, and who will make it through the Chris Lioutas
other side. PSK Financial Services -
Chief Investment Officer
