Select Portfolio Commentaries

It was a mixed month for equities, with UK, Japanese, Chinese and Emerging Markets posting positive returns during September. However, US equities declined especially as the prices of the “Magnificent Seven”, consisting of Apple, Microsoft, Alphabet, Amazon, Tesla, Nvidia and Meta, fell, which weighed on the overall US market. Nearly 97% of the total US stock market return during 2023 can be attributed to these seven stocks.

In August, market volatility increased, reflecting renewed stress in the Chinese property market, weak macroeconomic data out of China and an increase in government bond yields. Chinese authorities have acted by reducing interest rates twice in August as well as undertaking initiatives to support markets, but investors remain cautious, given the difficulties facing the largest Chinese property companies, Country Garden & Evengrande.

For the first time in 2023, emerging market equities outperformed developed markets. Predominantly this was due to the Chinese authorities pledging to boost and support the areas of the economy that most need it, which includes the ailing property sector. Overall, global equities made positive returns, receiving a boost from lower than expected inflation figures in the US and UK in particular.

Most equity markets made positive returns in June. The best performing equity market was the US, where technology stocks have continued to benefit from the investor enthusiasm for Artificial Intelligence. However, China and Asia Pacific ex Japan fell. Chinese equities fell as investors have been disappointed with the growth achieved after the country removed the last of its Covid restrictions and concerns remain about the ailing property sector. This had a knock on effect in the Asian markets.

With the exception of the US, Japan and some Asian markets, global equities declined in May as a mixture of economic data impacted investor sentiment. On the one hand, expectations for technology and in particular Artificial Intelligence (AI) aided some, but declining manufacturing output data, along with falling commodity process impacted others. Furthermore, with inflation still proving to be sticky, and expectations of further interest rate rises, Government bond yields continued to rise, which subsequently meant capital values fell.

April was a positive month for global equities overall, as better than expected and robust economic data aided investor sentiment. Concerns about the banking sector dissipated in the UK and this led to a recovery in this sector, albeit this was not the case in the US where the worries persisted.