The economic outlook remains in “contraction” territory but continues to be supported by resilient activity in the services sector.
Valuations are “expensive”, driven by a fairly narrow market rally. We are focussing on sectors with more attractive valuations where possible, positioning portfolios for a broader recovery.
Momentum for equities has remained positive despite the setback in August caused by a disappointing Chinese recovery.
Sentiment in markets remains in “neutral” territory albeit weakened in response to investors weighing the implications from the slowdown in China.
As ever, we are constantly monitoring markets. Should conditions change, particularly with regards to the economic regime or signals from our valuation, momentum and sentiment framework, we will adjust our asset allocation accordingly.
