Equity strategy and market outlook – February 2020

In this month’s strategy piece, Alastair believes that coronavirus-related disruption in developed nations is only likely to increase in coming weeks. Despite improving trends in infections, a significant contraction in economic activity in China is still signalled by alternative real-time data such as energy consumption, air pollution and traffic patterns. Despite the recent declines in equity markets, investors still seem to be relying on a theory of a Q1 and V-shaped recovery later in 2020. This is an over-optimistic assumption in our view and we remain cautious on equities at this time. Government bond yields are likely to remain low and precious metals elevated, at least until the peak in developed market infections has passed.

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