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MarketLink Insight |
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MarketLink Insight brings you in-depth analysis of current fund and market trends. Offering viewpoints and commentary from Fidelity fund managers, it's an indispensable tool to help keep you up to date. The impact of inflation With oil having traded at over $145 a barrel, inflation has become a key concern for markets.The already fragile economic growth of the west is under threat from rising prices whilst the same pressures may also take some of the steam out of the faster Asian and emerging market economies. With so much at stake, some of Fidelity’s leading portfolio managers share their views on the subject and explain what inflation means for the way they position their funds.
European high yield: the restoration of value In recent weeks, conditions in the European high yield market have improved: spreads have narrowed, there has been some new issuance in non-euro markets and the loan market has re-opened. However, looking ahead, I expect volatility to stay elevated in the near term and, using history as a guide, I am mindful that spreads could stay wide or widen further. Nevertheless, the spread widening has restored value to European high yield markets and I believe the attractive yields now on offer provide a cushion against the risk of spread widening and an increase in defaults. Overall, and amid the uncertainty, I believe it is an interesting time to consider building an exposure to the asset class.
Fixed Income market insight While focus has been on equity market volatility in recent weeks, less attention has been paid to fixed income markets. In recent months, government bonds have rallied as the US Federal Reserve cut interest rates and European central banks held off from further tightening. The strong performance of government bonds has also been driven by a "flight to quality" as investors worried about equity markets. Fidelity’s Fixed Income team believes that there is also quality to be found in other segments of the market and, here, explains where and why.
2008: Where next for global markets? Stock markets have seen extreme volatility as investors grapple with a range of possible outcomes for the global economy. To what degree is global growth dependent on the US outlook? Will there be further fall-out from the credit crisis? Can the US Federal Reserve (Fed) avoid a damaging recession that not only impacts the US, but which some investors fear may extend to the rest of the world? Is economic growth and demand from China, India and other emerging markets sufficient to ensure a ‘soft landing’ for the global economy? While it is impossible to predict exactly what 2008 may bring, for the time being, volatility looks like it is here to stay. In this paper, we consider the root causes of some of the current uncertainties in global markets and then outline some of the possible scenarios that may unfold.
Fidelity’s UK portfolio managers share their views The UK market is down 8% year-to-date (the FTSE 100 at 5942 on 25.01.08), faring just slightly better than Europe and Asia in sterling terms. This follows nearly five years of strong returns, a long bull-run by historical standards. In this Talking Point, Fidelity’s UK equity portfolio managers explain their thoughts on the recent volatility, how their portfolios are positioned and how they are taking advantage of volatility to buy stocks at attractive prices.
2008: Has the US stockmarket already discounted a recession? Right now, investors with a long-term perspective may be wise to consider not whether the US economy is in – or is poised to enter – a recession, but to what extent the stock market is already discounting economic weakness. As of 22 January 2008, the US stock market has declined more than 15% from its October 2007 peak. This is similar to previous recession-related declines in 1980 and 1990. More volatility may be on the way, but Federal Reserve interest rate cuts and widespread recognition of the slowdown may indicate the stock market is closer to a “bottom” than a “top.”
Interesting times lies ahead in 2008 The sub-prime mortgage crisis and the ensuing credit crunch in the US has provided an eventful year for world markets in 2007. We have witnessed significant volatility in both equity and fixed income markets, with monetary authorities around the world acting to bring a sense of order and calm to the markets. While the developed economies are bracing themselves for a US-led slowdown, the Asian economy seems to grow from strength to strength. The increased market volatility is likely to continue into 2008. However, Fidelity’s investment teams believe that the coming year could be one of the most interesting for the markets and solid investment opportunities still exist despite uncertain economic backdrop.
Bulletin: Casting the net wider in Asia The Asian region has changed significantly over the decade since the Asian crisis but is often still viewed as a high risk region - and with world markets witnessing higher volatility recently, investors may be questioning their exposure to riskier equity assets.
Fixed income market update Global bond markets have been exceptionally volatile recently, with extreme daily and intraday price movements. This has seen a typical ‘flight-to-quality’, from credit markets to government bonds.
Asia Pacific Equity - August 2007 As world markets have shown signs of greater volatility this year, some investors may be questioning their exposure to riskier equity assets. Many still view Asia as a high risk region and may not fully appreciate the changes that have occurred since the Asian Crisis of 1997. Widespread corporate restructuring, political reforms and economic improvements have helped make Asia the resilient, fast-growing economic region it is today, and have given rise to a new generation of world-class companies that are increasingly capable of delivering superior returns for investors.
The case for China - January 2007 China's economy has developed into a global force since the introduction of free-market reforms in 1978. China has since become the world’s fourth-largest economy and the impact of this rise is being felt the world over.
The case for India - January 2007 India is one of the world’s economic success stories thanks to reforms that have overturned decades of central policies. This paper looks at why India was forced into economic reforms, what they entailed and the results they have achieved.
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