Press comment: Five charts that told the story of 2019
Hinesh Patel, portfolio manager at Quilter Investors, said: “2019 was another year of strong returns for both equity and bond markets as the ebb and flow of geopolitical risks helped to drive alternating periods of ‘risk-on’ and ‘risk-off’ sentiment among investors.
“Mr Trump’s penchant for raising the stakes in his trade war with China (and others) has resulted in almost $750bn of trade goods being weighed down with increased trade tariffs.
“Global manufacturing struggled in an industry-wide contraction. Softening global demand was exacerbated by geopolitics, a bitter trade war and sector-specific issues, most notably in autos. Optimistically, the last three readings suggest improvement.
“Although US services purchasing managers’ index (PMI) data continued to indicate expansion toward the end of 2019, confidence among US company leaders hit a 10-year low. Historically, this suggests the key pillar of growth is at risk of stalling – however a trade deal should help lift this sentiment markedly.”
Equity markets in 2019
“After one of the toughest fourth quarters on record, equity markets started 2019 in a more optimistic mood. They were buoyed by a concerted campaign from the US Federal Reserve (Fed) to show that, despite hiking rates in 2018, it would reverse its path for a “market friendly” 2019.
"Developed stock markets rallied right into May before they were derailed by the threat of increased US trade tariffs on China. Similar threats from Mr Trump also sent markets lower once more in August before sentiment slowly improved on the promise of an, as yet unsigned, ‘phase 1’ trade agreement between the two economic titans.”
Bond markets in 2019
Source: MSCI, Macrobond
“With central banks globally providing more accommodation, bonds made strong progress in 2019 with spreads over sovereign debt continuing to tighten.
Yields on government bonds made fresh record-lows (pushing up their prices), especially during the ‘risk-off’ periods seen in May and August.
In 2019, negatively-yielding sovereign debt touched $17trn. By August all German government bonds traded with a negative yield.”
Are dark days for manufacturing over?
Source: IHS Markit, Bloomberg
“With a trade war raging, Chinese growth decelerating and company inventories already high, 2019 saw one of the most difficult years for global manufacturing in more than two decades.
"With its export-driven economy, Germany was one of the worst victims in 2019. Meanwhile, UK manufacturing job losses had hit their highest clip in a decade by the end of the third quarter.
"Nevertheless, the second half of the year began to show relative improvement – after 15 consecutive months of contraction, the last three months (to October 2019) were better.”
Source: Conference Board, Institute for Supply Management (ISM), Macrobond
“As the end of 2019 approached, US purchasing managers’ index (PMI) data was resolutely ahead of the 50 reading that indicates continued economic expansion.
"However, the CEO survey conducted by the Conference Board has proved to be a very effective leading indicator of where services PMI figures go next.
"The last time that US CEOs were this worried about the outlook for their companies was back in 2010 at the height of the last recession.
"This doesn’t bode well for US PMI data in the first half of 2020 – but could be reversed very quickly with a trade deal.”
A storm in a teacup?
“Global markets have been rocked by the exchanges in Mr Trump’s pernicious trade war while global growth forecasts have recoiled.
"However, the actual change in the value of imports to the US has changed relatively little year-on-year (the real damage has been inflicted by increasing tariffs on imported goods).
"Overall Mexico has benefited most from China’s declining imports to the US. Vietnam and Taiwan have also made ground although there’s been speculation of goods being repackaged there.
"Meanwhile, European countries such as the Netherlands, the UK, Ireland and France have also profited.”
Notes to Editors
About Quilter plc:
Quilter Investors is part of Quilter plc. It provides multi-asset investment solutions designed for advised clients in the UK and internationally and manages £20.3 billion on behalf of its investors (as at 30 September 2019).
Quilter plc is a leading wealth management business in the UK and internationally, helping to create prosperity for the generations of today and tomorrow.
Quilter plc oversees £109.8 billion in customer investments (as at 30 September 2019, excluding Heritage life assurance).
It has an adviser and customer offering spanning: financial advice; investment platforms; multi-asset investment solutions; and discretionary fund management.
The business is comprised of two segments: Advice and Wealth Management and Wealth Platforms.
Advice and Wealth Management encompasses the financial advice business, Quilter Financial Planning; the discretionary fund management business, Quilter Cheviot; and Quilter Investors, the Multi-asset investment solutions business.
Wealth Platforms includes Old Mutual Wealth UK platform and Old Mutual International, including AAM Advisory in Singapore.
The Old Mutual Wealth Heritage life assurance business was acquired by ReAssure Group Plc on 2 January 2020.
Since its IPO in June 2018, Quilter plc’s businesses have progressively rebranded to Quilter, as follows:
- Quilter Financial Planning (previously Intrinsic)
- Quilter Private Client Advisers (previously Old Mutual Wealth Private Client Advisers)
- Charles Derby Group (becoming Quilter Financial Advisers)
- Quilter Financial Adviser School
- Quilter Cheviot
- Quilter Investors
- Old Mutual Wealth (becoming Quilter Wealth Solutions in 2020)
- Old Mutual International (becoming Quilter International in 2020)
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