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July 29, 2018 | 13:30 | Dubai – Barclays announced today the findings of its Q3 2018 Compass Report, which outlines the Private Bank’s tactical recommendations on portfolio asset allocations for investors around the world.
The report’s key takeaways note that the global economy is likely to continue to reward investment portfolios titled toward stocks. Barclays’ investment experts see stocks more likely to outperform the bond market, which is expected to face both greater inflation as well as increasingly resolute central bankers.
Commenting on the Q3 tactical investment recommendations, Bjorn Holderbeke, Head of Investment Advisory, Middle East and North Africa, said: “Our team of experts believe that the acceleration phase of global economic expansion seems to be passing, according to the latest cyclical indicators, which reflect future changes in economic activity. However, those same indicators tell us that growth remains on a solid footing. We believe that the world economy will continue to grow, and still see the cycle end as a relatively distant prospect.”
He added: “With a healthy global economy allowing for strong profit growth across a range of sectors, and inflationary forces remaining contained, our experts believe that the fundamental backdrop for stocks remains attractive.”
The Q3 2018 Compass report kept a tactical overweight position in Developed Markets Equities, with the preferred developed region to invest in being Continental Europe, and with some exposure to Japan to enhance diversification. In terms of sectors, Barclays is currently leaning towards industrials, technology, and financial stocks.
Emerging Markets Equities are also outlined as a tactical overweight within a moderate risk portfolio. The outlook for companies within emerging markets remains strong, as business confidence surveys and trade data confirms; despite the key macro risk emerging from trade protectionism. Barclays’ experts believe that the risks of a global trade war are not yet high enough to justify reducing exposure to the emerging market region. Asia remains the preferred region in the asset class, with Korea, Taiwan, China (offshore) and India being the favoured bets on a long term basis.
High Yield & Emerging Markets Bonds have been kept at a tactical overweight, favouring Global High Yield over Emerging Markets Debt, with the former offering a higher yield and lower duration risk.
Allocations to Developed Government and Investment Grade Bonds, Cash and Short-Maturity Bonds, and Alternative Trading Strategies remained tactically underweight in the latest Compass report. The report also kept a neutral view towards Commodities and Real Estate, which retains pro-cyclical characteristics.