Investment update for September 2021
Covid-19 isn't going down without a fight, but vaccines are offering a way out. Meanwhile, solid corporate earnings overshadow disruptive elements like stricter Chinese regulation and renewed tensions in the Middle East. The global economy remains firmly on the path of ‘returning to normal’. We do not, therefore, anticipate any problems with vertigo and continue to back shares, above all sectors and regions that stand to benefit from the revival in consumer spending.
In a nutshell
During the summer, US and European listed companies released absolutely outstanding results for the second quarter. Thanks to the reopening of the economy, both turnover and earnings increased significantly.
Companies and stock market analysts are also maintaining a rosy outlook for the coming quarters. All indicators point to further robust economic growth. As a result of the successful vaccination campaign, Covid-19 will lose its grip on the western economy.
The rest of the world continues to grapple with the virus, as vaccination rates elsewhere are considerably lower. Consequently, we are limiting positions in Japan or Asian emerging markets in our investment strategy.
Share prices have been boosted as a result of rock-solid corporate earnings. The outlook for stock markets remains positive. This should not prove an issue as long as rising share prices are supported by improved corporate results.
Remaining invested is therefore recommended, with shares still a good choice. KBC Asset Management strategists continue to closely monitor economic developments, with fund managers stepping in immediately if your funds require adjustment.
Covid-19 not going down without a fight
The purported return to freedom has clearly failed to materialise. The battle against the Delta variant continues unabated in Europe, while coronavirus measures have been tightened again on other continents too.
The virus is still very much present, but fortunately the increase in hospital admissions and acute cases remains rather limited.
Pressure on the health system is still manageable. This ought to head off further strict lockdown measures, but vaccination remains as great a priority as ever. In the meantime, an additional round of booster shots for the most vulnerable groups seems inevitable.
Excellent earnings growth spurs equity markets to new highs
Second-quarter corporate earnings have now mostly been published and were downright impressive.
Sales figures and corporate earnings growth were both a pleasant surprise, while forecasts for the months ahead were upgraded further.
Vertigo not a problem
The strong economic recovery, rapid vaccination, hefty government spending and quite a few consumers with money to spend support our positive expectations. Furthermore, we take extra encouragement from the way corporate earnings have amply exceeded forecasts. We are now waiting to hear how and when the US central bank will adjust its bond purchasing policy. We remain convinced that it will also maintain its supportive policy for some time to come and will only taper very gradually.
Due in part to Chinese government intervention in a number tech companies and tensions in the Middle East, there is occasionally a certain amount of nervousness on the financial markets. Stock markets remain focused on the economic recovery, however, which continues unabated.
In effect, we are having few problems with vertigo and continue to opt for shares. Sectors that will benefit from the economic recovery are preferred, with the consumer and leisure sectors looking particularly attractive.We're also backing companies in the financial sector, while at regional level we are ‘following’ the vaccination route and going all in on Europe.
Besides this long-term vision, protection and trends on the financial markets are also important aspects. Your personal investment, which you can see in KBC Brussels Mobile and KBC Brussels Touch, may have a different composition that takes account of your comfort zone.