$1 Trillion Asset Manager Betting Heavily On Equities Turnaround in 2019
Following a volatile year that will end in losses form most of the world’s major equities markets and signs of slowing global economy, many of those investing online, not to mention the majority of industry experts, could be forgiven for a bearish outlook on 2019. However, one of the world’s biggest investors, a senior money manager at Goldman Sachs Asset Management responsible for over $1 trillion in capital, is of a different opinion. Shoqat Bunglawala, head of the global portfolio solutions group for Europe, the Middle East, Africa and Asia Pacific recently told Bloomberg that he and his time are bullish on equities and intend to invest heavily in the new year.
A bad 2018 that has seen valuations decline, combined with faith that global growth will do better than many expect in 2019, is the basis for Bunglawala’s position. His fund is leaning towards emerging markets as a value opportunity after this year’s rout but also believes U.S. stocks are attractive after recent declines.
It’s a contrarian view with most major investors currently very bearish after a painful 12 months for stock markets. The MSCI World Index is set to finish the year to its worst return since 2008 – the eye of the storm of the international financial crisis that devastated financial markets. 2018 also has the unwanted distinction of being the year where investors in both equities and debt benchmarks will both see negative returns for the first time since as far back as 1998.
However, the capital flight from emerging markets this year does mean that major investors have the most positive sentiment towards them in a decade. The sell-off appears to have been overcooked and now offers value. But Bunglawala has toned down his fund’s exposure to European stocks from an overweight position earlier in the year over concerns around the impact of Brexit and the Italian debt crisis. The approach to UK companies is also ‘neutral’.
Bunglawala does, however, believe that the volatility we’ve seen over the course of 2018 will remain a feature of markets for the foreseeable future. He told Bloomberg:
“Whilst we expect to see converging growth, through improvements in non-U.S. growth, which we expect to translate to positive returns for equities, we do expect volatility to remain elevated.”
A bullish approach to equities is brave in the current environment and might just give those investing online who had planned a year of entrenchment in 2019 something to think about.
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