11 December 2019
We asked a number of our fund managers what they think will be the key events for their asset class in 2020 and their possible impacts.
Investment Director, Emerging Markets Fixed Income
Obviously, the US election is hugely important. There are a number of very distinct positions across the Democratic Party, all of them contrasting with President Trump. We are also keeping a close eye on the trade war. Those are the two key issues, in our view. We are also hearing about the prospect of a recession, but that is not at the top of our agenda at the moment.
Investment Director, Japan Equities
Four years ago, we had a strong rally of value versus growth, and some volatility pervaded. This time, we believe volatility will be lower because of the lower probability of political surprise. In 2019, we saw share buybacks in Japan rise 60% year-on-year, a significant increase, which demonstrates companies’ willingness to improve return on equity. It also demonstrates their confidence on the earnings outlook in the long term. We believe that trend will continue. We will also see the 2020 Summer Olympic Games hosted in Tokyo.
Investment Director, Global Macro & Currency Fixed Income
The top of the list would clearly be US politics and the trade arrangements with China. A key 2020 development could also be experiencing weaker than expected growth in the US. Against that backdrop, we may also see rising inflation. There are mounting pressures already on US inflation, which we feel will make it a very difficult environment, as corporate margins will be squeezed even further. That could be a challenging situation for risk in general.
Investment Manager, Emerging Markets Equities
The launch of 5G in Asia could underpin earnings growth for the whole region. While upstream 5G has already seen good performance, we anticipate that the real delta will be in those downstream companies. Providers will likely place their technological advancements, such as cameras and lenses, into their 5G phones in order to boost competitiveness.
Investment Director, European Non-Directional Equity
One key factor we are considering is whether this slowdown in earnings will turn into a severe fall or not. If that does happen, then it probably means the world economy has tilted into a recession. In that case, many investors who were buying equities as a way to escape the negative yields of bonds could be disappointed.
Co-Founder and Managing Director of Fermat Capital Management
What we are looking for is a tremendous expansion of our market. We are expecting record issuance of catastrophe bonds. It is interesting to see how many and which players will actually come back to market in 2020.
Investment Manager, Luxury Equities
M&A has now started in the sector. LVMH has fired the starting gun with its acquisition of Tiffany, and we would expect to see more companies in the sector follow suit with their M&A plans. Further to that, we have the existence of several important events that were impacting the luxury sector, such as the Gillet Jaune and the Hong Kong protests. As those start to unwind, that should benefit the sector.
Investment Director, GAM Systematic
As we are a systematic manager, we are not particularly connected to events; however, the market environment does affect us. A wild market would be a different market for us, compared to a calm market. We do not anticipate the 2020 market to be very calm.
Investment Director, Switzerland Equities
The year 2019 has been a terrific year for Swiss companies. Certainly, the trade war between the US and China will be an important topic next year. As Swiss companies are very global, there is need for global stabilisation. Hopefully, if there is no recession in 2020, it will continue to be a good environment for Swiss companies.
Investment Director, Healthcare Equities
We feel that 2020 will be fairly quiet in terms of events; the US election is the only significant event. In terms of the impact on valuation, this year  we have seen that healthcare has been one of the worst performing sectors.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. Reference to a specific security is not a recommendation to buy or sell that security.