Global equities rally continuing their strong run in 2019

XPS Investment News - December 2019

Bringing you our market round-up and the latest news affecting UK pension scheme investments

Month in brief

– UK equities produce positive returns over the month

– Global equity markets also rally following early signs of improving activity in certain areas

– The funding level of a typical scheme would have increased marginally over the month owing to a small increase in gilt yields

Uncertainty surrounding the UK’s economic direction dragged on over the month as the UK builds up to the 12 December general election. Figures released have shown that domestic demand and exports are being impacted, and although the UK avoided a recession in Q3 2019, the economy grew at its slowest rate since 2010, missing growth expectations. In addition, November’s Purchasing Managers’ Index (PMI) numbers for the UK showed contractions in both the services and manufacturing sectors. Despite this backdrop, UK equities produced positive returns over the month and Sterling remained relatively stable against the US Dollar whilst marginally strengthening against the Euro.

Globally, there were some early signs of improving activity in certain areas and developed market global equities performed well. PMI numbers for both manufacturing and services improved in the US and manufacturing PMI numbers in Germany improved for the second month in a row, although the sector remains in contraction. The German car industry remains in crisis and both Daimler and Audi announced over the month that they are each due to axe around 10,000 workers worldwide. Global trade continues to cast a shadow on recovery hopes – figures released for Q3 2019 revealed global trade contractions across the G20 group of major economies which accounts for 85% of world output.

Hong Kong’s Hang Seng Index fell materially as anti-government protests turned increasingly violent. US-China trade news was mixed with limited progress and Donald Trump complicated the negotiations further at the end of the month when he signed the Hong Kong Human Rights and Democracy Act into law. This has been taken as a confrontational move by China as it implements an annual review to ensure that China isn’t encroaching on Hong Kong’s autonomy.

                            One Month to 30 November 2019


Yields globally continued to rise throughout November although a significant amount of global government bond yields, particularly in Europe, remain in negative territory.

The funding level of a typical scheme would have increased marginally over the month owing to beneficial yield and inflation movements. Asset performance was relatively flat.

To discuss any of the issues covered in this edition, please get in touch with Steven Hickey. Alternatively, please speak to your usual XPS Investment contact.

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