Monthly market update in <300 words: FEBRUARY

Written by Gavin Haynes · 02.02.21

Gavin is a leading authority on portfolio management, fund selection and asset allocation. In his spare time he enjoys wildlife photography, hiking and watching cricket.

It has been a subdued start to 2021 (and not just because of dry January). The emergence of new, faster spreading variants of COVID-19 is providing a dose of reality that we are not returning to a normalised environment anytime soon.

Understandably, investors have become more risk averse after the surge of optimism following the approval of vaccines. But a muted fall of 0.8% in the MSCI World Index was far from the panic selling witnessed last March and there was little investor appetite for traditional safe haven assets such as gold and Government bonds, with both areas performing badly during the period (Source: Financial Express).

Having been the worst performing market of major stock markets in 2020, there are signs of recovery in the UK (Source: Financial Express). The twin catalysts of a Brexit deal and the mass rollout of vaccines are helping to turn around sentiment. UK fund managers certainly appear more optimistic, looking to exploit relatively cheap valuations versus other major markets.

However, it was Asian markets that really shone, fuelled by China (the MSCI China Index was up 7.2%, according to data from Financial Express) where, despite the emergence of isolated COVID-19 cases, the economy continues to function at close to capacity and is predicted to see growth of around 8% in 2021. The start of the year won’t necessarily set the market trend; but Asian markets look well placed. Better handling of the pandemic, lower debt levels, good demographics, and some world-leading companies – it could be an exciting combination for long-term investors.

The information in this post is not financial advice, it is provided solely to help you make your own investment decisions. If you are unsure about whether an investment is appropriate for you, please seek professional financial advice. You can find more information here.

When you invest you should remember that the value of investments, and the income from them, can go down as well as up and that past performance is no guarantee of future return.

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