02 October 2020
At GAM Investments’ Weekly Equities Meeting held on 29 September, Ali Miremadi shared his views on the macro environment and cyclical sectors of the economy.
Ali Miremadi – Global Equities
Investors are understandably cautious given current high valuations of growth stocks, Covid-19 virus developments and the astonishing macro environment. It could be argued that the ‘Japanification’ metaphor (unorthodox monetary stimulus, interest rates stuck at zero indefinitely) is increasingly appropriate for the world economy. If a vaccine is approved at some point this year and becomes available in developed markets in H1 2021, it seems reasonable to assume the economic growth picture should improve. Does this mean investors should make moves into more cyclical sectors? In our view, it is not that simple. Travel and hospitality remain in the eye of the storm and while a vaccine would make difference, it is difficult to make judgement calls on extended outperformance. The same can be said for financials, oil & gas and autos, where the risks are considerable, in our view. Ultimately, we believe an effective way to hedge these risks is to be ultra-selective on exposures with a strong emphasis on valuations.
Source: GAM unless otherwise stated. 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. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice. Reference to a security is not a recommendation to buy or sell that security. The companies listed were selected from the universe of companies covered by the portfolio managers to assist the reader in better understanding the themes presented. The companies included are not necessarily held by any portfolio or represent any recommendations by the portfolio managers. October 2020.