Investment Clock insights

2018 Q3 review: submerging markets

Trevor Greetham

3 October 2018

UK stocks fell slightly in the third quarter of 2018 but global stocks made new highs led by the US (chart 1). Emerging markets continued to underperform (chart 2).  Emerging market equities were the best performing asset class in 2016 and 2017 as global growth surged after stimulus from China (table 1, see full review). Fortunes changed in 2018 and emerging markets are at the bottom of the pile year to date.  These markets are caught in the crosshairs between a slowing Chinese economy pushing industrial commodity prices lower and a rising cost of US dollar finance as the US Federal Reserve hikes rates. Trade war concerns make it a perfect storm. We moved underweight by May with the proceeds going into US equities.

Click here to read the full Q3 review, including tables of multi asset returns over Q3 and year to date.

See our current multi asset positioning blog post for the latest information on our active strategies.

Chart 1: UK and overseas equities (in GBP) 

Source: Thomson Reuters Datastream as at 02/10/2018

Chart 2: Emerging market equities vs the world

Source: Thomson Reuters Datastream as at 02/10/2018

Past performance is no guide to the future. The value of investments and the income from them is not guaranteed and may go down as well as up and investors may not get back the amount originally invested. The views expressed are the author’s own and do not constitute investment advice.